“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on PerkinElmer, Inc. (NYSE:PKI) in order to identify whether reputable and successful top money managers continue to believe in its potential.
PerkinElmer, Inc. (NYSE:PKI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds’ portfolios at the end of September. 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 Kirkland Lake Gold Ltd. (NYSE:KL), Lennox International Inc. (NYSE:LII), and Henry Schein, Inc. (NASDAQ:HSIC) to gather more data points. Our calculations also showed that PKI 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.
In the eyes of most shareholders, hedge funds are assumed to be worthless, old financial tools of years past. While there are over 8000 funds trading at the moment, We hone in on the aristocrats of this group, about 750 funds. These hedge fund managers direct most of all hedge funds’ total capital, and by keeping an eye on their best picks, Insider Monkey has found numerous investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Paul Marshall of Marshall Wace
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the latest hedge fund action regarding PerkinElmer, Inc. (NYSE:PKI).
How are hedge funds trading PerkinElmer, Inc. (NYSE:PKI)?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in PKI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in PerkinElmer, Inc. (NYSE:PKI), which was worth $608.9 million at the end of the third quarter. On the second spot was Echo Street Capital Management which amassed $86.3 million worth of shares. Impax Asset Management, Citadel Investment Group, and Fisher Asset Management 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 Select Equity Group allocated the biggest weight to PerkinElmer, Inc. (NYSE:PKI), around 4.12% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, earmarking 1.46 percent of its 13F equity portfolio to PKI.
Judging by the fact that PerkinElmer, Inc. (NYSE:PKI) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers that slashed their entire stakes heading into Q4. At the top of the heap, Christopher James’s Partner Fund Management sold off the largest investment of the 750 funds followed by Insider Monkey, worth close to $20.6 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also dumped its stock, about $7.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to PerkinElmer, Inc. (NYSE:PKI). We will take a look at Kirkland Lake Gold Ltd. (NYSE:KL), Lennox International Inc. (NYSE:LII), Henry Schein, Inc. (NASDAQ:HSIC), and WestRock Company (NYSE:WRK). This group of stocks’ market values are similar to PKI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KL | 16 | 376065 | -5 |
| LII | 21 | 193706 | 0 |
| HSIC | 22 | 1248443 | -2 |
| WRK | 26 | 606489 | 0 |
| Average | 21.25 | 606176 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $606 million. That figure was $975 million in PKI’s case. WestRock Company (NYSE:WRK) is the most popular stock in this table. On the other hand Kirkland Lake Gold Ltd. (NYSE:KL) is the least popular one with only 16 bullish hedge fund positions. PerkinElmer, Inc. (NYSE:PKI) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on PKI, though not to the same extent, as the stock returned 9.2% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
