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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of PerkinElmer, Inc. (NYSE:PKI).
Is PKI stock a buy? PerkinElmer, Inc. (NYSE:PKI) has experienced a decrease in hedge fund sentiment of late. PerkinElmer, Inc. (NYSE:PKI) was in 31 hedge funds' portfolios at the end of December. The all time high for this statistic is 36. Our calculations also showed that PKI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's take a peek at the key hedge fund action surrounding PerkinElmer, Inc. (NYSE:PKI).
Do Hedge Funds Think PKI Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PKI over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in PerkinElmer, Inc. (NYSE:PKI), which was worth $1481.8 million at the end of the fourth quarter. On the second spot was Impax Asset Management which amassed $159.1 million worth of shares. Echo Street Capital Management, AQR Capital Management, and Marshall Wace LLP 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 Select Equity Group allocated the biggest weight to PerkinElmer, Inc. (NYSE:PKI), around 6.08% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, dishing out 2.77 percent of its 13F equity portfolio to PKI.
Seeing as PerkinElmer, Inc. (NYSE:PKI) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there is a sect of hedgies that elected to cut their positions entirely heading into Q1. It's worth mentioning that Renaissance Technologies sold off the biggest investment of the 750 funds followed by Insider Monkey, worth close to $58.8 million in stock. Ken Griffin's fund, Citadel Investment Group, also dumped its stock, about $28.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 5 funds heading into Q1.
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. These stocks are Quest Diagnostics Incorporated (NYSE:DGX), Nucor Corporation (NYSE:NUE), KeyCorp (NYSE:KEY), Citrix Systems, Inc. (NASDAQ:CTXS), Seagate Technology plc (NASDAQ:STX), Tiffany & Co. (NYSE:TIF), and Varian Medical Systems, Inc. (NYSE:VAR). This group of stocks' market values resemble PKI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DGX,45,531778,3 NUE,29,138612,1 KEY,29,317740,-4 CTXS,29,352466,-2 STX,30,2167418,7 TIF,48,2623109,-13 VAR,49,2414410,-3 Average,37,1220790,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1221 million. That figure was $1979 million in PKI's case. Varian Medical Systems, Inc. (NYSE:VAR) is the most popular stock in this table. On the other hand Nucor Corporation (NYSE:NUE) is the least popular one with only 29 bullish hedge fund positions. PerkinElmer, Inc. (NYSE:PKI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PKI is 30.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately PKI wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); PKI investors were disappointed as the stock returned -7.5% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.