Were Hedge Funds Right About Selling Performance Food Group Company (PFGC)?
Is Performance Food Group Company (NYSE:PFGC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Performance Food Group Company (NYSE:PFGC) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic is 31. PFGC has experienced a decrease in hedge fund sentiment recently. There were 22 hedge funds in our database with PFGC positions at the end of the fourth quarter. Our calculations also showed that PFGC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Ricky Sandler of Eminence Capital
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Do Hedge Funds Think PFGC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in PFGC over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Ken Griffin's Citadel Investment Group has the number one position in Performance Food Group Company (NYSE:PFGC), worth close to $134.7 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $41.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish comprise D. E. Shaw's D E Shaw, Steve Cohen's Point72 Asset Management and Ricky Sandler's Eminence Capital. In terms of the portfolio weights assigned to each position Clearfield Capital allocated the biggest weight to Performance Food Group Company (NYSE:PFGC), around 2.87% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, dishing out 0.49 percent of its 13F equity portfolio to PFGC.
Because Performance Food Group Company (NYSE:PFGC) has faced a decline in interest from the smart money, logic holds that there was a specific group of funds that elected to cut their full holdings last quarter. Intriguingly, Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital dropped the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling close to $16.7 million in stock, and Principal Global Investors's Columbus Circle Investors was right behind this move, as the fund sold off about $12.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Performance Food Group Company (NYSE:PFGC) but similarly valued. These stocks are Capri Holdings Limited (NYSE:CPRI), AutoNation, Inc. (NYSE:AN), Western Midstream Partners, LP (NYSE:WES), Kilroy Realty Corp (NYSE:KRC), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), People's United Financial, Inc. (NASDAQ:PBCT), and Woodward Inc (NASDAQ:WWD). This group of stocks' market caps are similar to PFGC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPRI,47,909126,5 AN,24,585168,1 WES,8,127464,-2 KRC,27,328922,2 RARE,25,588066,-1 PBCT,20,208579,-9 WWD,27,643051,8 Average,25.4,484339,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $484 million. That figure was $331 million in PFGC's case. Capri Holdings Limited (NYSE:CPRI) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 8 bullish hedge fund positions. Performance Food Group Company (NYSE:PFGC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PFGC is 31.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately PFGC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PFGC investors were disappointed as the stock returned -22.1% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
