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Is PRFT A Good Stock To Buy Now?

Asma UL Husna
·6 min read

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Perficient, Inc. (NASDAQ:PRFT).

Is PRFT a good stock to buy now? Money managers were becoming less hopeful. The number of long hedge fund bets decreased by 4 recently. Perficient, Inc. (NASDAQ:PRFT) was in 17 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 23. Our calculations also showed that PRFT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 21 hedge funds in our database with PRFT positions at the end of the second quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the upper echelon of this group, about 850 funds. These money managers watch over the majority of the hedge fund industry's total capital, and by paying attention to their matchless stock picks, Insider Monkey has formulated several investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Gavin Saitowitz of Prelude Capital
Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind we're going to take a look at the new hedge fund action encompassing Perficient, Inc. (NASDAQ:PRFT).

Do Hedge Funds Think PRFT Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PRFT over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Perficient, Inc. (NASDAQ:PRFT) was held by GLG Partners, which reported holding $21.4 million worth of stock at the end of September. It was followed by Blue Grotto Capital with a $14.6 million position. Other investors bullish on the company included Intrinsic Edge Capital, Millennium Management, and McKinley Capital Management. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Perficient, Inc. (NASDAQ:PRFT), around 7.17% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, earmarking 0.91 percent of its 13F equity portfolio to PRFT.

Due to the fact that Perficient, Inc. (NASDAQ:PRFT) has faced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that slashed their entire stakes heading into Q4. Intriguingly, Ken Griffin's Citadel Investment Group dropped the biggest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $64.8 million in stock. Michael Johnston's fund, Steelhead Partners, also said goodbye to its stock, about $17.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds heading into Q4.

Let's go over hedge fund activity in other stocks similar to Perficient, Inc. (NASDAQ:PRFT). These stocks are Century Communities, Inc (NYSE:CCS), SiTime Corporation (NASDAQ:SITM), YPF Sociedad Anonima (NYSE:YPF), OSI Systems, Inc. (NASDAQ:OSIS), Freedom Holding Corp. (NASDAQ:FRHC), PQ Group Holdings Inc. (NYSE:PQG), and ALX Oncology Holdings Inc. (NASDAQ:ALXO). This group of stocks' market caps are similar to PRFT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCS,20,137952,-1 SITM,6,97608,-6 YPF,5,8535,-3 OSIS,17,70797,4 FRHC,6,26711,3 PQG,13,36502,7 ALXO,9,361214,9 Average,10.9,105617,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $74 million in PRFT's case. Century Communities, Inc (NYSE:CCS) is the most popular stock in this table. On the other hand YPF Sociedad Anonima (NYSE:YPF) is the least popular one with only 5 bullish hedge fund positions. Perficient, Inc. (NASDAQ:PRFT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRFT is 63.2. 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 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately PRFT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PRFT were disappointed as the stock returned 8% since the end of September (through 12/14) 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.

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

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