Hedge Funds Are Dumping Pacific Sunwear of California, Inc. (PSUN)

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Pacific Sunwear of California, Inc. (NASDAQ:PSUN).

Pacific Sunwear of California, Inc. (NASDAQ:PSUN) has experienced a decrease in hedge fund interest recently as the stock has plunged by over 54% in the last three months. Still, PSUN was in 7 hedge funds’ portfolios at the end of September and later on we will discuss in more detail which funds chose to stick to their holdings, and which investors opted to flee the stock. Moreover, 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 Paragon Offshore PLC (NYSE:PGN), Amedica Corporation (NASDAQ:AMDA), and ParkerVision, Inc. (NASDAQ:PRKR) to gather more data points.

To the average investor, there are numerous methods that stock market investors put to use to size up publicly traded companies. Two of the best methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best fund managers can trounce the S&P 500 by a solid margin (see the details here).

Keeping this in mind, we’re going to check out the key action surrounding Pacific Sunwear of California, Inc. (NASDAQ:PSUN).

What have hedge funds been doing with Pacific Sunwear of California, Inc. (NASDAQ:PSUN)?

At the Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 30% from the second quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in Pacific Sunwear of California, Inc. (NASDAQ:PSUN), which was worth $3.2 million at the end of September. Coming in second is Renaissance Technologies, which holds a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise Richard Mashaal’s Rima Senvest Management, Israel Englander’s Millennium Management, and Michael Zimmerman’s Prentice Capital Management.

Due to the fact that Pacific Sunwear of California, Inc. (NASDAQ:PSUN) has faced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that sold off their full holdings last quarter. Among them, Chuck Royce’s Royce & Associates said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling close to $1.4 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also dumped its position, worth about $0.1 million.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pacific Sunwear of California, Inc. (NASDAQ:PSUN) but similarly valued. These stocks are Paragon Offshore PLC (NYSE:PGN), Amedica Corporation (NASDAQ:AMDA), ParkerVision, Inc. (NASDAQ:PRKR), and Evoke Pharma Inc (NASDAQ:EVOK). This group of stocks’ market valuations resemble PSUN’s market valuation.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was just $1 million, which is lower than the $3 million in PSUN’s case. Paragon Offshore PLC (NYSE:PGN) is the most popular stock in this table. On the other hand Amedica Corporation (NASDAQ:AMDA) is the least popular one with only 4 bullish hedge fund positions. Pacific Sunwear of California, Inc. (NASDAQ:PSUN) 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 PGN might be a better candidate to consider a long position.