In this article we will check out the progression of hedge fund sentiment towards PFSweb, Inc. (NASDAQ:PFSW) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is PFSweb (PFSW) a good stock to buy now? PFSW was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. PFSW investors should be aware of an increase in activity from the world’s largest hedge funds of late. There were 7 hedge funds in our database with PFSW holdings at the end of June. Our calculations also showed that PFSW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are viewed as unimportant, outdated financial tools of the past. While there are more than 8000 funds in operation at the moment, Our researchers hone in on the aristocrats of this club, about 850 funds. These hedge fund managers direct bulk of the hedge fund industry’s total capital, and by shadowing their finest investments, Insider Monkey has unsheathed a few investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to view the fresh hedge fund action encompassing PFSweb, Inc. (NASDAQ:PFSW).
What have hedge funds been doing with PFSweb, Inc. (NASDAQ:PFSW)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in PFSW a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Portolan Capital Management was the largest shareholder of PFSweb, Inc. (NASDAQ:PFSW), with a stake worth $7.7 million reported as of the end of September. Trailing Portolan Capital Management was Renaissance Technologies, which amassed a stake valued at $5.5 million. Manatuck Hill Partners, Arrowstreet Capital, and G2 Investment Partners 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 Portolan Capital Management allocated the biggest weight to PFSweb, Inc. (NASDAQ:PFSW), around 0.87% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, dishing out 0.44 percent of its 13F equity portfolio to PFSW.
As aggregate interest increased, key hedge funds have jumped into PFSweb, Inc. (NASDAQ:PFSW) headfirst. Millennium Management, managed by Israel Englander, assembled the largest position in PFSweb, Inc. (NASDAQ:PFSW). Millennium Management had $0.4 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.1 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to PFSweb, Inc. (NASDAQ:PFSW). These stocks are EDAP TMS S.A. (NASDAQ:EDAP), PCB Bancorp (NASDAQ:PCB), ESSA Bancorp, Inc. (NASDAQ:ESSA), FVCBankcorp, Inc. (NASDAQ:FVCB), Leaf Group Ltd (NYSE:LEAF), Contura Energy, Inc. (NYSE:CTRA), and DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT). This group of stocks’ market caps resemble PFSW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EDAP | 3 | 9159 | 0 |
| PCB | 4 | 14857 | 0 |
| ESSA | 3 | 8857 | 1 |
| FVCB | 3 | 3495 | -1 |
| LEAF | 10 | 26521 | -1 |
| CTRA | 18 | 46876 | -1 |
| DRTT | 8 | 24577 | -1 |
| Average | 7 | 19192 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $16 million in PFSW’s case. Contura Energy, Inc. (NYSE:CTRA) is the most popular stock in this table. On the other hand EDAP TMS S.A. (NASDAQ:EDAP) is the least popular one with only 3 bullish hedge fund positions. PFSweb, Inc. (NASDAQ:PFSW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PFSW is 42.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately PFSW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PFSW were disappointed as the stock returned -1.5% since the end of September (through 12/2) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
