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Presidio, Inc. (PSDO): Are Hedge Funds Right About This Stock?

Al Green

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th. In this article we are going to take a look at smart money sentiment towards Presidio, Inc. (NASDAQ:PSDO).

Presidio, Inc. (NASDAQ:PSDO) was in 14 hedge funds' portfolios at the end of September. PSDO shareholders have witnessed an increase in support from the world's most elite money managers of late. There were 6 hedge funds in our database with PSDO holdings at the end of the previous quarter. Our calculations also showed that PSDO isn't among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Izzy Englander of MILLENNIUM MANAGEMENT

We're going to take a look at the new hedge fund action surrounding Presidio, Inc. (NASDAQ:PSDO).

Hedge fund activity in Presidio, Inc. (NASDAQ:PSDO)

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 133% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in PSDO heading into this year. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with PSDO Positions

Among these funds, Millennium Management held the most valuable stake in Presidio, Inc. (NASDAQ:PSDO), which was worth $5.1 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $4.3 million worth of shares. Moreover, Arrowstreet Capital, Laurion Capital Management, and Pentwater Capital Management were also bullish on Presidio, Inc. (NASDAQ:PSDO), allocating a large percentage of their portfolios to this stock.

As one would reasonably expect, key money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, assembled the largest position in Presidio, Inc. (NASDAQ:PSDO). Millennium Management had $5.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $4.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Benjamin A. Smith's Laurion Capital Management, and Matthew Halbower's Pentwater Capital Management.

Let's now take a look at hedge fund activity in other stocks similar to Presidio, Inc. (NASDAQ:PSDO). We will take a look at SUPERVALU INC. (NYSE:SVU), Accelerate Diagnostics Inc (NASDAQ:AXDX), AllianzGI NFJ Dividend, Interest & Premium Strategy Fund (NYSE:NFJ), and Ambarella Inc (NASDAQ:AMBA). This group of stocks' market values match PSDO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SVU,17,160948,-1 AXDX,6,61193,2 NFJ,4,7376,0 AMBA,15,81674,1 Average,10.5,77798,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $19 million in PSDO's case. SUPERVALU INC. (NYSE:SVU) is the most popular stock in this table. On the other hand AllianzGI NFJ Dividend, Interest & Premium Strategy Fund (NYSE:NFJ) is the least popular one with only 4 bullish hedge fund positions. Presidio, Inc. (NASDAQ:PSDO) 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. In this regard SVU might be a better candidate to consider a long position.

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

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