Here is What Hedge Funds Think About PFSweb, Inc. (PFSW)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like PFSweb, Inc. (NASDAQ:PFSW).

PFSweb, Inc. (NASDAQ:PFSW) has experienced an increase in enthusiasm from smart money recently. PFSW was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 7 hedge funds in our database with PFSW positions at the end of the previous quarter. 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 QCR Holdings, Inc. (NASDAQ:QCRH), Capital City Bank Group, Inc. (NASDAQ:CCBG), and U.S. Lime & Minerals Inc. (NASDAQ:USLM) to gather more data points.

To most market participants, hedge funds are viewed as slow, old investment tools of the past. While there are over an 8000 funds with their doors open today, We choose to focus on the moguls of this club, about 700 funds. These money managers administer bulk of the hedge fund industry’s total capital, and by following their best picks, Insider Monkey has unsheathed various investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s analyze the new action regarding PFSweb, Inc. (NASDAQ:PFSW).

How have hedgies been trading PFSweb, Inc. (NASDAQ:PFSW)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 57% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, G2 Investment Partners Management, managed by Josh Goldberg, holds the most valuable position in PFSweb, Inc. (NASDAQ:PFSW). G2 Investment Partners Management has a $25.3 million position in the stock, comprising 9.5% of its 13F portfolio. The second largest stake is held by Jim Simons’ Renaissance Technologies, with a $16 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Israel Englander’s Millennium Management, Brian Jackelow’s SAB Capital Management and Ken Griffin’s Citadel Investment Group.

As aggregate interest increased, key money managers have jumped into PFSweb, Inc. (NASDAQ:PFSW) headfirst. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, assembled the most valuable position in PFSweb, Inc. (NASDAQ:PFSW). Algert Coldiron Investors had $0.4 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.3 million investment in the stock during the quarter. The other funds with brand new PFSW positions are D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PFSweb, Inc. (NASDAQ:PFSW) but similarly valued. We will take a look at QCR Holdings, Inc. (NASDAQ:QCRH), Capital City Bank Group, Inc. (NASDAQ:CCBG), U.S. Lime & Minerals Inc. (NASDAQ:USLM), and Galena Biopharma Inc (NASDAQ:GALE). This group of stocks’ market values match PFSW’s market value.

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 $9 million, significantly below the $46 million in PFSW’s case. QCR Holdings, Inc. (NASDAQ:QCRH) is the most popular stock in this table with seven funds reporting stakes. On the other hand, U.S. Lime & Minerals Inc. (NASDAQ:USLM) is the least popular one. Compared to these stocks PFSweb, Inc. (NASDAQ:PFSW) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.