While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Petmed Express Inc (NASDAQ:PETS).
Petmed Express Inc (NASDAQ:PETS) was in 16 hedge funds’ portfolios at the end of the first quarter of 2019. PETS investors should be aware of an increase in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with PETS holdings at the end of the previous quarter. Our calculations also showed that pets isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
We’re going to take a look at the new hedge fund action regarding Petmed Express Inc (NASDAQ:PETS).
What have hedge funds been doing with Petmed Express Inc (NASDAQ:PETS)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in PETS a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Petmed Express Inc (NASDAQ:PETS). Renaissance Technologies has a $37.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $6.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of Noam Gottesman’s GLG Partners, Ken Griffin’s Citadel Investment Group and Paul Marshall and Ian Wace’s Marshall Wace LLP.
As industrywide interest jumped, some big names have jumped into Petmed Express Inc (NASDAQ:PETS) headfirst. Sio Capital, managed by Michael Castor, established the largest position in Petmed Express Inc (NASDAQ:PETS). Sio Capital had $4.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Petmed Express Inc (NASDAQ:PETS) but similarly valued. We will take a look at Corenergy Infrastructure Trust Inc (NYSE:CORR), PennantPark Investment Corp. (NASDAQ:PNNT), Dynavax Technologies Corporation (NASDAQ:DVAX), and Bonanza Creek Energy Inc (NYSE:BCEI). This group of stocks’ market values are similar to PETS’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CORR,11,43465,4 PNNT,9,13823,0 DVAX,16,85298,-2 BCEI,16,158718,2 Average,13,75326,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $74 million in PETS’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand PennantPark Investment Corp. (NASDAQ:PNNT) is the least popular one with only 9 bullish hedge fund positions. Petmed Express Inc (NASDAQ:PETS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately PETS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PETS were disappointed as the stock returned -26.4% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
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