It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Presidio, Inc. (NASDAQ:PSDO) during the quarter below.
Presidio, Inc. (NASDAQ:PSDO) has experienced a decrease in support from the world’s most elite money managers in recent months. PSDO was in 6 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 14 hedge funds in our database with PSDO holdings at the end of the previous quarter. Our calculations also showed that PSDO isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the fresh hedge fund action encompassing Presidio, Inc. (NASDAQ:PSDO).
What does the smart money think about Presidio, Inc. (NASDAQ:PSDO)?
At Q4’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -57% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PSDO over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AlphaOne Capital Partners was the largest shareholder of Presidio, Inc. (NASDAQ:PSDO), with a stake worth $3.2 million reported as of the end of December. Trailing AlphaOne Capital Partners was AQR Capital Management, which amassed a stake valued at $0.5 million. Zebra Capital Management, Arrowstreet Capital, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Presidio, Inc. (NASDAQ:PSDO) has faced bearish sentiment from hedge fund managers, we can see that there were a few fund managers who sold off their full holdings by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $5.1 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $4.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 8 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Presidio, Inc. (NASDAQ:PSDO) but similarly valued. We will take a look at Beneficial Bancorp, Inc. (NASDAQ:BNCL), Hercules Capital, Inc. (NYSE:HTGC), BrightView Holdings, Inc. (NYSE:BV), and Saul Centers Inc (NYSE:BFS). This group of stocks’ market valuations are similar to PSDO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNCL | 12 | 81062 | 3 |
| HTGC | 11 | 17785 | 1 |
| BV | 10 | 36258 | -3 |
| BFS | 7 | 25253 | 0 |
| Average | 10 | 40090 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $5 million in PSDO’s case. Beneficial Bancorp, Inc. (NASDAQ:BNCL) is the most popular stock in this table. On the other hand Saul Centers Inc (NYSE:BFS) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Presidio, Inc. (NASDAQ:PSDO) is even less popular than BFS. Hedge funds dodged a bullet by taking a bearish stance towards PSDO. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately PSDO wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); PSDO investors were disappointed as the stock returned 11.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
