The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Pegasystems Inc. (NASDAQ:PEGA).
Is Pegasystems Inc. (NASDAQ:PEGA) ready to rally soon? Prominent investors were getting less bullish. The number of long hedge fund bets fell by 8 in recent months. Pegasystems Inc. (NASDAQ:PEGA) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic is 35. Our calculations also showed that PEGA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Christian Leone of Luxor Capital Group
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Do Hedge Funds Think PEGA Is A Good Stock To Buy Now?
At Q2’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in PEGA a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Bares Capital Management held the most valuable stake in Pegasystems Inc. (NASDAQ:PEGA), which was worth $701.9 million at the end of the second quarter. On the second spot was Luxor Capital Group which amassed $479.4 million worth of shares. Praesidium Investment Management Company, Foxhaven Asset Management, and Southpoint Capital Advisors 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 Bares Capital Management allocated the biggest weight to Pegasystems Inc. (NASDAQ:PEGA), around 12.48% of its 13F portfolio. Praesidium Investment Management Company is also relatively very bullish on the stock, earmarking 11.98 percent of its 13F equity portfolio to PEGA.
Since Pegasystems Inc. (NASDAQ:PEGA) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds who were dropping their full holdings heading into Q3. It’s worth mentioning that Eric Bannasch’s Cadian Capital dropped the largest position of all the hedgies tracked by Insider Monkey, valued at close to $40 million in stock, and Ryan Frick and Oliver Evans’s Dorsal Capital Management was right behind this move, as the fund dumped about $20 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 8 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to Pegasystems Inc. (NASDAQ:PEGA). We will take a look at Cree, Inc. (NASDAQ:CREE), IPG Photonics Corporation (NASDAQ:IPGP), Essential Utilities Inc (NYSE:WTRG), Pentair plc (NYSE:PNR), Formula One Group (NASDAQ:FWONK), F5 Networks, Inc. (NASDAQ:FFIV), and Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF). This group of stocks’ market valuations resemble PEGA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CREE | 31 | 391130 | 1 |
| IPGP | 23 | 399842 | -8 |
| WTRG | 13 | 272737 | -6 |
| PNR | 25 | 748622 | -5 |
| FWONK | 41 | 1724231 | 4 |
| FFIV | 30 | 704710 | 4 |
| KOF | 9 | 461993 | -1 |
| Average | 24.6 | 671895 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $672 million. That figure was $2029 million in PEGA’s case. Formula One Group (NASDAQ:FWONK) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 9 bullish hedge fund positions. Pegasystems Inc. (NASDAQ:PEGA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PEGA is 48.3. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately PEGA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PEGA were disappointed as the stock returned -7% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Pegasystems Inc (NASDAQ:PEGA)
Follow Pegasystems Inc (NASDAQ:PEGA)
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Disclosure: None. This article was originally published at Insider Monkey.
