Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of PAR Technology Corporation (NYSE:PAR).
PAR Technology Corporation (NYSE:PAR) investors should pay attention to an increase in support from the world's most elite money managers lately. PAR was in 8 hedge funds' portfolios at the end of September. There were 5 hedge funds in our database with PAR holdings at the end of the previous quarter. Our calculations also showed that PAR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="alignnone" width="600"] Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action surrounding PAR Technology Corporation (NYSE:PAR).
How are hedge funds trading PAR Technology Corporation (NYSE:PAR)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in PAR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, ADW Capital held the most valuable stake in PAR Technology Corporation (NYSE:PAR), which was worth $26.7 million at the end of the third quarter. On the second spot was Nantahala Capital Management which amassed $14.9 million worth of shares. Royce & Associates, Berylson Capital Partners, and Deep Field Asset 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 ADW Capital allocated the biggest weight to PAR Technology Corporation (NYSE:PAR), around 28.94% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, setting aside 2.27 percent of its 13F equity portfolio to PAR.
As aggregate interest increased, key hedge funds have been driving this bullishness. Berylson Capital Partners, managed by James Thomas Berylson, assembled the largest position in PAR Technology Corporation (NYSE:PAR). Berylson Capital Partners had $0.9 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $0.5 million investment in the stock during the quarter. The other funds with brand new PAR positions are Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as PAR Technology Corporation (NYSE:PAR) but similarly valued. These stocks are Mitek Systems, Inc. (NASDAQ:MITK), CalAmp Corp. (NASDAQ:CAMP), Sierra Wireless, Inc. (NASDAQ:SWIR), and Regalwood Global Energy Ltd. (NYSE:RWGE). This group of stocks' market valuations match PAR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MITK,15,39841,-2 CAMP,10,128434,-6 SWIR,12,63843,2 RWGE,14,128064,0 Average,12.75,90046,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $55 million in PAR's case. Mitek Systems, Inc. (NASDAQ:MITK) is the most popular stock in this table. On the other hand CalAmp Corp. (NASDAQ:CAMP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks PAR Technology Corporation (NYSE:PAR) is even less popular than CAMP. Hedge funds clearly dropped the ball on PAR 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on PAR as the stock returned 26.6% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.