Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Park Electrochemical Corp. (NYSE:PKE) from the perspective of those successful funds.
Park Electrochemical Corp. (NYSE:PKE) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of September. At the end of this article we will also compare PKE to other stocks including Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI), OncoMed Pharmaceuticals Inc (NASDAQ:OMED), and Organovo Holdings Inc (NYSEMKT:ONVO) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, let’s check out the fresh action encompassing Park Electrochemical Corp. (NYSE:PKE).
What does the smart money think about Park Electrochemical Corp. (NYSE:PKE)?
Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. By comparison, 7 hedge funds held shares or bullish call options in PKE heading into this year. So, let’s see 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, Chuck Royce’s Royce & Associates has the number one position in Park Electrochemical Corp. (NYSE:PKE), worth close to $48.4 million, accounting for 0.3% of its total 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, one of the largest hedge funds in the world, holding a $16.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that are bullish consist of Mario Gabelli’s GAMCO Investors, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to Park Electrochemical Corp. (NYSE:PKE). We will take a look at Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI), OncoMed Pharmaceuticals Inc (NASDAQ:OMED), Organovo Holdings Inc (NYSEMKT:ONVO), and Karyopharm Therapeutics Inc (NASDAQ:KPTI). This group of stocks’ market caps resemble PKE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HYI | 1 | 2363 | -1 |
| OMED | 14 | 56730 | 6 |
| ONVO | 9 | 3356 | 2 |
| KPTI | 8 | 41728 | 2 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $81 million in PKE’s case. OncoMed Pharmaceuticals Inc (NASDAQ:OMED) is the most popular stock in this table. On the other hand Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI) is the least popular one with only 1 bullish hedge fund positions. Park Electrochemical Corp. (NYSE:PKE) 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. In this regard OMED might be a better candidate to consider taking a long position in.
