PerkinElmer, Inc. (PKI) vs. Top 20 Hedge Fund Stocks in 2019
Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57%. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 41.3% in 2019 and outperformed the broader market benchmark by 10.1 percentage points. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
PerkinElmer, Inc. (NYSE:PKI) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Kirkland Lake Gold Ltd. (NYSE:KL), Lennox International Inc. (NYSE:LII), and Henry Schein, Inc. (NASDAQ:HSIC) to gather more data points. Our calculations also showed that PKI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
In the financial world there are several tools stock traders employ to evaluate their holdings. Some of the less known tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the market by a superb margin (see the details here).
[caption id="attachment_735677" align="aligncenter" width="1680"]
Sander Gerber of Hudson Bay Capital[/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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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 is still extremely cheap despite already gaining 20 percent. Now let's take a gander at the recent hedge fund action regarding PerkinElmer, Inc. (NYSE:PKI).
What does smart money think about PerkinElmer, Inc. (NYSE:PKI)?
Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. By comparison, 23 hedge funds held shares or bullish call options in PKI 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.
When looking at the institutional investors followed by Insider Monkey, Robert Joseph Caruso's Select Equity Group has the largest position in PerkinElmer, Inc. (NYSE:PKI), worth close to $608.9 million, amounting to 4.1% of its total 13F portfolio. The second largest stake is held by Echo Street Capital Management, led by Greg Poole, holding a $86.3 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions encompass Ian Simm's Impax Asset Management, Ken Griffin's Citadel Investment Group and Ken Fisher's Fisher Asset Management. In terms of the portfolio weights assigned to each position Select Equity Group allocated the biggest weight to PerkinElmer, Inc. (NYSE:PKI), around 4.12% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, designating 1.46 percent of its 13F equity portfolio to PKI.
Because PerkinElmer, Inc. (NYSE:PKI) has experienced bearish sentiment from hedge fund managers, it's safe to say that there were a few hedgies who sold off their positions entirely by the end of the third quarter. Interestingly, Christopher James's Partner Fund Management dropped the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth about $20.6 million in stock. Sander Gerber's fund, Hudson Bay Capital Management, also said goodbye to its stock, about $7.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as PerkinElmer, Inc. (NYSE:PKI) but similarly valued. We will take a look at Kirkland Lake Gold Ltd. (NYSE:KL), Lennox International Inc. (NYSE:LII), Henry Schein, Inc. (NASDAQ:HSIC), and WestRock Company (NYSE:WRK). This group of stocks' market values are closest to PKI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KL,16,376065,-5 LII,21,193706,0 HSIC,22,1248443,-2 WRK,26,606489,0 Average,21.25,606176,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $606 million. That figure was $975 million in PKI's case. WestRock Company (NYSE:WRK) is the most popular stock in this table. On the other hand Kirkland Lake Gold Ltd. (NYSE:KL) is the least popular one with only 16 bullish hedge fund positions. PerkinElmer, Inc. (NYSE:PKI) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately PKI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PKI were disappointed as the stock returned 24% in 2019 and trailed 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
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