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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Preformed Line Products Company (NASDAQ:PLPC).
Hedge fund interest in Preformed Line Products Company (NASDAQ:PLPC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PLPC to other stocks including Retail Value Inc. (NYSE:RVI), Macatawa Bank Corporation (NASDAQ:MCBC), and Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are perceived as unimportant, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, We look at the leaders of this group, about 850 funds. It is estimated that this group of investors have their hands on bulk of the smart money's total asset base, and by keeping an eye on their top equity investments, Insider Monkey has deciphered a few investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually 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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Peter Rathjens of Arrowstreet Capital[/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 stocks recommended/scorned by legendary Bill Miller. 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. Now we're going to go over the recent hedge fund action regarding Preformed Line Products Company (NASDAQ:PLPC).
Hedge fund activity in Preformed Line Products Company (NASDAQ:PLPC)
At Q1's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. By comparison, 7 hedge funds held shares or bullish call options in PLPC a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Preformed Line Products Company (NASDAQ:PLPC), which was worth $16.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $4 million worth of shares. Invenomic Capital Management, Arrowstreet Capital, and Millennium 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 Invenomic Capital Management allocated the biggest weight to Preformed Line Products Company (NASDAQ:PLPC), around 0.57% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.23 percent of its 13F equity portfolio to PLPC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the first quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Preformed Line Products Company (NASDAQ:PLPC) but similarly valued. We will take a look at Retail Value Inc. (NYSE:RVI), Macatawa Bank Corporation (NASDAQ:MCBC), Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), and Stemline Therapeutics Inc (NASDAQ:STML). This group of stocks' market valuations are similar to PLPC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RVI,13,72113,-3 MCBC,10,19243,2 SOI,11,29159,-1 STML,15,75214,0 Average,12.25,48932,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $23 million in PLPC's case. Stemline Therapeutics Inc (NASDAQ:STML) is the most popular stock in this table. On the other hand Macatawa Bank Corporation (NASDAQ:MCBC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Preformed Line Products Company (NASDAQ:PLPC) is even less popular than MCBC. Hedge funds dodged a bullet by taking a bearish stance towards PLPC. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately PLPC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); PLPC investors were disappointed as the stock returned 5.6% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.