Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of PC Tel Inc (NASDAQ:PCTI) based on that data and determine whether they were really smart about the stock.
Is PC Tel Inc (NASDAQ:PCTI) ready to rally soon? The smart money was turning less bullish. The number of long hedge fund bets were trimmed by 7 in recent months. Our calculations also showed that PCTI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_140292" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the new hedge fund action regarding PC Tel Inc (NASDAQ:PCTI).
Hedge fund activity in PC Tel Inc (NASDAQ:PCTI)
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -39% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in PCTI a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PC Tel Inc (NASDAQ:PCTI) was held by Renaissance Technologies, which reported holding $9.3 million worth of stock at the end of September. It was followed by Rutabaga Capital Management with a $4.5 million position. Other investors bullish on the company included Royce & Associates, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to PC Tel Inc (NASDAQ:PCTI), around 2.7% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to PCTI.
Because PC Tel Inc (NASDAQ:PCTI) has faced a decline in interest from the smart money, we can see that there was a specific group of funds that elected to cut their entire stakes last quarter. It's worth mentioning that Michael Gelband's ExodusPoint Capital sold off the largest stake of the "upper crust" of funds monitored by Insider Monkey, comprising an estimated $0.3 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also dropped its stock, about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 7 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as PC Tel Inc (NASDAQ:PCTI) but similarly valued. These stocks are RTI Surgical Holdings, Inc. (NASDAQ:RTIX), Oxford Square Capital Corp. (NASDAQ:OXSQ), EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), and Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS). This group of stocks' market values match PCTI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RTIX,10,11461,-3 OXSQ,6,2487,-1 EYPT,3,812,1 PIRS,19,47612,-2 Average,9.5,15593,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $23 million in PCTI's case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) is the least popular one with only 3 bullish hedge fund positions. PC Tel Inc (NASDAQ:PCTI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately PCTI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PCTI were disappointed as the stock returned 1.3% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.