Where Do Hedge Funds Stand On Pool Corporation (POOL)?

·5 min read

In this article we will check out the progression of hedge fund sentiment towards Pool Corporation (NASDAQ:POOL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Hedge fund interest in Pool Corporation (NASDAQ:POOL) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that POOL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Shinhan Financial Group Co., Ltd. (NYSE:SHG), Rollins, Inc. (NYSE:ROL), and Genuine Parts Company (NYSE:GPC) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to go over the key hedge fund action surrounding Pool Corporation (NASDAQ:POOL).

Michael Gelband of ExodusPoint Capital

Do Hedge Funds Think POOL Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. By comparison, 36 hedge funds held shares or bullish call options in POOL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Pool Corporation (NASDAQ:POOL) was held by Select Equity Group, which reported holding $385.6 million worth of stock at the end of September. It was followed by Impax Asset Management with a $120.8 million position. Other investors bullish on the company included Echo Street Capital Management, Fisher Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Aubrey Capital Management allocated the biggest weight to Pool Corporation (NASDAQ:POOL), around 2.26% of its 13F portfolio. Precept Capital Management is also relatively very bullish on the stock, setting aside 1.89 percent of its 13F equity portfolio to POOL.

Since Pool Corporation (NASDAQ:POOL) has witnessed bearish sentiment from hedge fund managers, logic holds that there were a few fund managers that slashed their entire stakes heading into Q4. Interestingly, Steve Cohen's Point72 Asset Management dropped the largest stake of the "upper crust" of funds followed by Insider Monkey, comprising about $12.4 million in stock, and Mark Coe's Intrinsic Edge Capital was right behind this move, as the fund said goodbye to about $4.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks similar to Pool Corporation (NASDAQ:POOL). These stocks are Shinhan Financial Group Co., Ltd. (NYSE:SHG), Rollins, Inc. (NYSE:ROL), Genuine Parts Company (NYSE:GPC), Nuance Communications Inc. (NASDAQ:NUAN), CMS Energy Corporation (NYSE:CMS), Principal Financial Group Inc (NASDAQ:PFG), and Jacobs Engineering Group Inc. (NYSE:J). All of these stocks' market caps resemble POOL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SHG,6,31064,1 ROL,23,539369,-7 GPC,28,469773,-1 NUAN,61,4867945,-11 CMS,25,415325,-6 PFG,18,146441,0 J,20,955724,-9 Average,25.9,1060806,-4.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $1061 million. That figure was $1136 million in POOL's case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 6 bullish hedge fund positions. Pool Corporation (NASDAQ:POOL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for POOL is 65.2. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on POOL as the stock returned 27.8% since the end of Q3 (through 11/30) 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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