In this article we will analyze whether Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) a marvelous investment right now? Prominent investors were taking a pessimistic view. The number of long hedge fund positions dropped by 1 lately. Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) was in 6 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that PAC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 7 hedge funds in our database with PAC positions at the end of the second quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's take a peek at the key hedge fund action regarding Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC).
How are hedge funds trading Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PAC over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), with a stake worth $80.1 million reported as of the end of September. Trailing Renaissance Technologies was Southpoint Capital Advisors, which amassed a stake valued at $8.9 million. Millennium Management, Marshall Wace LLP, and Voss Capital 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 Voss Capital allocated the biggest weight to Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), around 0.29% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, dishing out 0.2 percent of its 13F equity portfolio to PAC.
Because Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) has faced bearish sentiment from hedge fund managers, it's safe to say that there was a specific group of fund managers who sold off their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the largest stake of all the hedgies followed by Insider Monkey, valued at about $10.1 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund said goodbye to about $0.4 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC). These stocks are Appian Corporation (NASDAQ:APPN), Freshpet Inc (NASDAQ:FRPT), MDU Resources Group Inc (NYSE:MDU), SmileDirectClub, Inc. (NASDAQ:SDC), United Therapeutics Corporation (NASDAQ:UTHR), Continental Resources, Inc. (NYSE:CLR), and Old Republic International Corporation (NYSE:ORI). This group of stocks' market caps resemble PAC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APPN,15,587857,-3 FRPT,23,167945,2 MDU,23,163166,2 SDC,28,157051,8 UTHR,31,1077253,-10 CLR,25,101739,2 ORI,31,263457,5 Average,25.1,359781,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $360 million. That figure was $94 million in PAC's case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Appian Corporation (NASDAQ:APPN) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) is even less popular than APPN. Our overall hedge fund sentiment score for PAC is 26.5. 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. Hedge funds clearly dropped the ball on PAC as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on PAC as the stock returned 30.1% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.