U.S. Markets open in 17 mins

Perceptron, Inc. (PRCP): Hedge Fund Sentiment Unchanged

Debasis Saha

Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren't very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds' top 20 stock picks easily bested the broader market, at 37.4% compared to 27.5%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn't perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.

Perceptron, Inc. (NASDAQ:PRCP) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of September. At the end of this article we will also compare PRCP to other stocks including Town Sports International Holdings, Inc. (NASDAQ:CLUB), LSC Communications, Inc. (NYSE:LKSD), and Friedman Industries (NYSE:FRD) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Today there are tons of tools shareholders employ to grade stocks. A couple of the less known tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best fund managers can trounce their index-focused peers by a significant margin (see the details here).

[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]

RENAISSANCE TECHNOLOGIES

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to view the latest hedge fund action surrounding Perceptron, Inc. (NASDAQ:PRCP).

What have hedge funds been doing with Perceptron, Inc. (NASDAQ:PRCP)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in PRCP 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.

Is PRCP A Good Stock To Buy?

The largest stake in Perceptron, Inc. (NASDAQ:PRCP) was held by Harbert Management, which reported holding $4.7 million worth of stock at the end of September. It was followed by Ariel Investments with a $4.3 million position. Other investors bullish on the company included Renaissance Technologies, Royce & Associates, and Ancora Advisors. In terms of the portfolio weights assigned to each position Harbert Management allocated the biggest weight to Perceptron, Inc. (NASDAQ:PRCP), around 7.04% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to PRCP.

Since Perceptron, Inc. (NASDAQ:PRCP) has faced falling interest from the smart money, logic holds that there was a specific group of fund managers that slashed their entire stakes last quarter. Intriguingly, Matthew Hulsizer's PEAK6 Capital Management dumped the largest stake of the "upper crust" of funds monitored by Insider Monkey, totaling close to $0.1 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also dropped its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks similar to Perceptron, Inc. (NASDAQ:PRCP). These stocks are Town Sports International Holdings, Inc. (NASDAQ:CLUB), LSC Communications, Inc. (NYSE:LKSD), Friedman Industries (NYSE:FRD), and Gevo, Inc. (NASDAQ:GEVO). All of these stocks' market caps are closest to PRCP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLUB,9,22210,-1 LKSD,10,6738,1 FRD,1,3206,0 GEVO,1,1787,0 Average,5.25,8485,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $16 million in PRCP's case. LSC Communications, Inc. (NYSE:LKSD) is the most popular stock in this table. On the other hand Friedman Industries (NYSE:FRD) is the least popular one with only 1 bullish hedge fund positions. Perceptron, Inc. (NASDAQ:PRCP) 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 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. Unfortunately PRCP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PRCP were disappointed as the stock returned -6.7% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.

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

Related Content