PPG Industries, Inc. (PPG): Hedge Funds In Wait-and-See Mode
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of PPG Industries, Inc. (NYSE:PPG).
PPG Industries, Inc. (NYSE:PPG) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 35 hedge funds' portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Credit Suisse Group AG (NYSE:CS), Fresenius Medical Care AG & Co. (NYSE:FMS), and Trane Technologies plc (NYSE:TT) to gather more data points. Our calculations also showed that PPG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most traders, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, We hone in on the upper echelon of this club, approximately 850 funds. Most estimates calculate that this group of people watch over the majority of the smart money's total capital, and by keeping an eye on their best equity investments, Insider Monkey has found a number of investment strategies that have historically surpassed the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Ken Griffin of Citadel Investment Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a look at the latest hedge fund action surrounding PPG Industries, Inc. (NYSE:PPG).
What does smart money think about PPG Industries, Inc. (NYSE:PPG)?
At Q1's end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PPG over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in PPG Industries, Inc. (NYSE:PPG), which was worth $92.1 million at the end of the third quarter. On the second spot was D E Shaw which amassed $39.9 million worth of shares. Interval Partners, Renaissance Technologies, 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 Interval Partners allocated the biggest weight to PPG Industries, Inc. (NYSE:PPG), around 2.99% of its 13F portfolio. Gotham Asset Management is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to PPG.
Seeing as PPG Industries, Inc. (NYSE:PPG) has witnessed bearish sentiment from hedge fund managers, we can see that there were a few money managers that slashed their full holdings in the third quarter. It's worth mentioning that Alexander Mitchell's Scopus Asset Management sold off the largest position of the "upper crust" of funds followed by Insider Monkey, worth about $20 million in stock, and Louis Bacon's Moore Global Investments was right behind this move, as the fund cut about $6.3 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to PPG Industries, Inc. (NYSE:PPG). These stocks are Credit Suisse Group AG (NYSE:CS), Fresenius Medical Care AG & Co. (NYSE:FMS), Trane Technologies plc (NYSE:TT), and Cerner Corporation (NASDAQ:CERN). This group of stocks' market valuations are closest to PPG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CS,11,134498,1 FMS,10,16944,-1 TT,36,615498,36 CERN,41,1005893,7 Average,24.5,443208,10.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $443 million. That figure was $393 million in PPG's case. Cerner Corporation (NASDAQ:CERN) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 10 bullish hedge fund positions. PPG Industries, Inc. (NYSE:PPG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on PPG as the stock returned 22.3% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
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