Hedge Funds Aren’t Crazy About PerkinElmer, Inc. (PKI) Anymore

PerkinElmer, Inc. (NYSE:PKI) was in 29 hedge funds’ portfolio at the end of the first quarter of 2013. PKI shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 29 hedge funds in our database with PKI positions at the end of the previous quarter.

If you’d ask most market participants, hedge funds are assumed to be slow, old investment vehicles of the past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey hone in on the aristocrats of this club, about 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total asset base, and by paying attention to their top picks, we have formulated a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, optimistic insider trading activity is a second way to parse down the financial markets. Just as you’d expect, there are lots of incentives for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this method if shareholders understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the key action surrounding PerkinElmer, Inc. (NYSE:PKI).

What does the smart money think about PerkinElmer, Inc. (NYSE:PKI)?

At Q1’s end, a total of 29 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in PerkinElmer, Inc. (NYSE:PKI). Royce & Associates has a $138.6 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Robert Joseph Caruso of Select Equity Group, with a $88.3 million position; 1.2% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Ricky Sandler’s Eminence Capital, Donald Chiboucis’s Columbus Circle Investors and Edgar Wachenheim’s Greenhaven Associates.

Since PerkinElmer, Inc. (NYSE:PKI) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds that elected to cut their positions entirely in Q1. Intriguingly, David Dreman’s Dreman Value Management dropped the largest stake of the “upper crust” of funds we track, comprising an estimated $27.9 million in stock.. Brian Ashford-Russell and Tim Woolley’s fund, Polar Capital, also sold off its stock, about $7.6 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in PerkinElmer, Inc. (NYSE:PKI)

Insider purchases made by high-level executives is best served when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, PerkinElmer, Inc. (NYSE:PKI) has seen zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to PerkinElmer, Inc. (NYSE:PKI). These stocks are Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), Alere Inc (NYSE:ALR), Mettler-Toledo International Inc. (NYSE:MTD), PAREXEL International Corporation (NASDAQ:PRXL), and Covance Inc. (NYSE:CVD). All of these stocks are in the medical laboratories & research industry and their market caps are closest to PKI’s market cap.

With the results shown by the aforementioned studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and PerkinElmer, Inc. (NYSE:PKI) is no exception.

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