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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Quanta Services Inc (NYSE:PWR) makes for a good investment right now.
Is PWR a good stock to buy? Prominent investors were becoming more confident. The number of bullish hedge fund positions improved by 1 in recent months. Quanta Services Inc (NYSE:PWR) was in 32 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that PWR 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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.
Louis Bacon Moore of Moore Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 latest hedge fund action regarding Quanta Services Inc (NYSE:PWR).
Do Hedge Funds Think PWR Is A Good Stock To Buy Now?
At third quarter's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PWR over the last 21 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Peconic Partners LLC held the most valuable stake in Quanta Services Inc (NYSE:PWR), which was worth $300.4 million at the end of the third quarter. On the second spot was Lyrical Asset Management which amassed $177.5 million worth of shares. AQR Capital Management, D E Shaw, and Electron Capital Partners 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 Peconic Partners LLC allocated the biggest weight to Quanta Services Inc (NYSE:PWR), around 53.53% of its 13F portfolio. ACK Asset Management is also relatively very bullish on the stock, earmarking 6.32 percent of its 13F equity portfolio to PWR.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. BeaconLight Capital, managed by Ed Bosek, initiated the biggest position in Quanta Services Inc (NYSE:PWR). BeaconLight Capital had $12.5 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $6.7 million position during the quarter. The other funds with new positions in the stock are Louis Bacon's Moore Global Investments, Charles Davidson and Joseph Jacobs's Wexford Capital, and Parvinder Thiara's Athanor Capital.
Let's now review hedge fund activity in other stocks similar to Quanta Services Inc (NYSE:PWR). These stocks are AptarGroup, Inc. (NYSE:ATR), Howmet Aerospace Inc. (NYSE:HWM), Newell Brands Inc. (NYSE:NWL), Americold Realty Trust (NYSE:COLD), Molson Coors Beverage Company (NYSE:TAP), nCino, Inc. (NASDAQ:NCNO), and Assurant, Inc. (NYSE:AIZ). All of these stocks' market caps match PWR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATR,28,241807,2 HWM,35,2448447,5 NWL,27,1266887,-6 COLD,30,273605,1 TAP,33,316589,-3 NCNO,26,121408,26 AIZ,23,854291,-8 Average,28.9,789005,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $789 million. That figure was $824 million in PWR's case. Howmet Aerospace Inc. (NYSE:HWM) is the most popular stock in this table. On the other hand Assurant, Inc. (NYSE:AIZ) is the least popular one with only 23 bullish hedge fund positions. Quanta Services Inc (NYSE:PWR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PWR is 65.3. 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. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on PWR as the stock returned 29.2% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.