We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Grupo Aeroportuario del Pacifico (NYSE:PAC).
Grupo Aeroportuario del Pacifico (NYSE:PAC) investors should pay attention to an increase in hedge fund sentiment of late. PAC was in 7 hedge funds’ portfolios at the end of December. There were 3 hedge funds in our database with PAC positions at the end of the previous quarter. Our calculations also showed that PAC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Louis Navellier of Navellier & Associates
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s check out the new hedge fund action encompassing Grupo Aeroportuario del Pacifico (NYSE:PAC).
Hedge fund activity in Grupo Aeroportuario del Pacifico (NYSE:PAC)
Heading into the first quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 133% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in PAC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Grupo Aeroportuario del Pacifico (NYSE:PAC), with a stake worth $122.3 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $14.2 million. Millennium Management, Marshall Wace LLP, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Grupo Aeroportuario del Pacifico (NYSE:PAC), around 0.09% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.09 percent of its 13F equity portfolio to PAC.
Now, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most outsized position in Grupo Aeroportuario del Pacifico (NYSE:PAC). Millennium Management had $3.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $2 million position during the quarter. The following funds were also among the new PAC investors: Louis Navellier’s Navellier & Associates and Matthew Tewksbury’s Stevens Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Grupo Aeroportuario del Pacifico (NYSE:PAC) but similarly valued. We will take a look at CDK Global Inc (NASDAQ:CDK), Ascendis Pharma A/S (NASDAQ:ASND), Sibanye Gold Ltd (NYSE:SBGL), and The Gap Inc. (NYSE:GPS). All of these stocks’ market caps are similar to PAC’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDK,25,356570,-4 ASND,38,2756276,4 SBGL,13,187761,-2 GPS,31,128423,4 Average,26.75,857258,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $857 million. That figure was $145 million in PAC’s case. Ascendis Pharma A/S (NASDAQ:ASND) is the most popular stock in this table. On the other hand Sibanye Gold Ltd (NYSE:SBGL) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Grupo Aeroportuario del Pacifico (NYSE:PAC) is even less popular than SBGL. Hedge funds dodged a bullet by taking a bearish stance towards PAC. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately PAC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PAC investors were disappointed as the stock returned -44.9% during the same time 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 most of these stocks already outperformed the market so far in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.