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Park City Group, Inc. (PCYG: Hedge Funds Can’t Make Up Their Minds

Nina Todic

Is Park City Group, Inc. (NASDAQ:PCYG) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Park City Group, Inc. (NASDAQ:PCYG) was in 3 hedge funds' portfolios at the end of September. PCYG investors should pay attention to a decrease in activity from the world's largest hedge funds recently. There were 4 hedge funds in our database with PCYG holdings at the end of the previous quarter. Our calculations also showed that PCYG isn't among the 30 most popular stocks among hedge funds.

In today’s marketplace there are plenty of methods shareholders put to use to evaluate publicly traded companies. A pair of the less known methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outclass their index-focused peers by a superb amount (see the details here).

[caption id="attachment_26357" align="aligncenter" width="359"] Ken Fisher of Fisher Asset Management[/caption]

FISHER ASSET MANAGEMENT

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's analyze the recent hedge fund action surrounding Park City Group, Inc. (NASDAQ:PCYG).

How have hedgies been trading Park City Group, Inc. (NASDAQ:PCYG)?

Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in PCYG over the last 17 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

No of Hedge Funds with PCYG Positions

The largest stake in Park City Group, Inc. (NASDAQ:PCYG) was held by Renaissance Technologies, which reported holding $0.3 million worth of stock at the end of September. It was followed by Paloma Partners with a $0.2 million position. The only other hedge fund that is bullish on the company was Fisher Asset Management.

Because Park City Group, Inc. (NASDAQ:PCYG) has experienced falling interest from the smart money, it's easy to see that there lies a certain "tier" of fund managers that decided to sell off their full holdings in the third quarter. Interestingly, Israel Englander's Millennium Management dropped the largest stake of all the hedgies followed by Insider Monkey, comprising about $0.5 million in stock, and Andrew Weiss's Weiss Asset Management was right behind this move, as the fund said goodbye to about $0.1 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in the third quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Park City Group, Inc. (NASDAQ:PCYG) but similarly valued. These stocks are Meridian Corporation (NASDAQ:MRBK), Eastman Kodak Company (NYSE:KODK), SilverBow Resorces, Inc. (NYSE:SBOW), and Hovnanian Enterprises, Inc. (NYSE:HOV). This group of stocks' market valuations are closest to PCYG's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRBK,5,20857,0 KODK,5,13670,0 SBOW,6,68043,1 HOV,8,8758,5 Average,6,27832,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $1 million in PCYG's case. Hovnanian Enterprises, Inc. (NYSE:HOV) is the most popular stock in this table. On the other hand Meridian Corporation (NASDAQ:MRBK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Park City Group, Inc. (NASDAQ:PCYG) is even less popular than MRBK. Hedge funds dodged a bullet by taking a bearish stance towards PCYG. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately PCYG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PCYG investors were disappointed as the stock returned -24.6% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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