As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Psychemedics Corporation (NASDAQ:PMD).
Psychemedics Corporation (NASDAQ:PMD) investors should pay attention to an increase in hedge fund interest of late. PMD was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with PMD holdings at the end of the previous quarter. Our calculations also showed that PMD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a large number of tools stock traders use to value publicly traded companies. A couple of the most innovative tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outpace the broader indices by a healthy margin (see the details here).
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a look at the recent hedge fund action surrounding Psychemedics Corporation (NASDAQ:PMD).
How have hedgies been trading Psychemedics Corporation (NASDAQ:PMD)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in PMD a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Psychemedics Corporation (NASDAQ:PMD), worth close to $4.1 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, holding a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Frederick DiSanto’s Ancora Advisors, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and . In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Psychemedics Corporation (NASDAQ:PMD), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0035 percent of its 13F equity portfolio to PMD.
Now, key hedge funds have jumped into Psychemedics Corporation (NASDAQ:PMD) headfirst. Ancora Advisors, managed by Frederick DiSanto, created the biggest position in Psychemedics Corporation (NASDAQ:PMD). Ancora Advisors had $0.2 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Psychemedics Corporation (NASDAQ:PMD) but similarly valued. These stocks are The LGL Group, Inc. (NYSE:LGL), Synacor Inc (NASDAQ:SYNC), Dawson Geophysical Company (NASDAQ:DWSN), and Elmira Savings Bank (NASDAQ:ESBK). This group of stocks’ market valuations match PMD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LGL | 4 | 8741 | 1 |
| SYNC | 6 | 8111 | 1 |
| DWSN | 8 | 5741 | 0 |
| ESBK | 1 | 367 | 0 |
| Average | 4.75 | 5740 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $5 million in PMD’s case. Dawson Geophysical Company (NASDAQ:DWSN) is the most popular stock in this table. On the other hand Elmira Savings Bank (NASDAQ:ESBK) is the least popular one with only 1 bullish hedge fund positions. Psychemedics Corporation (NASDAQ:PMD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PMD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PMD investors were disappointed as the stock returned 2% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
