Is Park Aerospace Corp. (PKE) Going to Burn These Hedge Funds?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Park Aerospace Corp. (NYSE:PKE) changed recently.

Park Aerospace Corp. (NYSE:PKE) has seen an increase in enthusiasm from smart money of late. Park Aerospace Corp. (NYSE:PKE) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 13. There were 8 hedge funds in our database with PKE positions at the end of the first quarter. Our calculations also showed that PKE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Michael Price of MFP Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s view the latest hedge fund action regarding Park Aerospace Corp. (NYSE:PKE).

Do Hedge Funds Think PKE Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in PKE a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Park Aerospace Corp. (NYSE:PKE), with a stake worth $20.2 million reported as of the end of June. Trailing Renaissance Technologies was GAMCO Investors, which amassed a stake valued at $10.2 million. Roubaix Capital, MFP Investors, and Royce & Associates 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 Roubaix Capital allocated the biggest weight to Park Aerospace Corp. (NYSE:PKE), around 3.14% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to PKE.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the most outsized position in Park Aerospace Corp. (NYSE:PKE). Tudor Investment Corp had $0.5 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Park Aerospace Corp. (NYSE:PKE). We will take a look at Celcuity Inc. (NASDAQ:CELC), VirnetX Holding Corporation (NYSE:VHC), Silicom Ltd. (NASDAQ:SILC), Howard Bancorp Inc (NASDAQ:HBMD), P.A.M. Transportation Services, Inc. (NASDAQ:PTSI), Bluerock Residential Growth REIT Inc (NYSE:BRG), and FS Bancorp, Inc. (NASDAQ:FSBW). All of these stocks’ market caps resemble PKE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $40 million in PKE’s case. Celcuity Inc. (NASDAQ:CELC) is the most popular stock in this table. On the other hand P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) is the least popular one with only 2 bullish hedge fund positions. Park Aerospace Corp. (NYSE:PKE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PKE is 66.4. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately PKE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PKE were disappointed as the stock returned -6.2% since the end of June (through 9/27) 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.

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Disclosure: None. This article was originally published at Insider Monkey.