In this article we will take a look at whether hedge funds think Pioneer Power Solutions, Inc. (NASDAQ:PPSI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is PPSI a good stock to buy now? Prominent investors were becoming less confident. The number of bullish hedge fund positions decreased by 1 recently. Pioneer Power Solutions, Inc. (NASDAQ:PPSI) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 4. Our calculations also showed that PPSI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with PPSI holdings at the end of December.
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Matthew Hulsizer of PEAK6 Capital
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Do Hedge Funds Think PPSI Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in PPSI over the last 23 quarters. 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, Renaissance Technologies held the most valuable stake in Pioneer Power Solutions, Inc. (NASDAQ:PPSI), which was worth $0.2 million at the end of the fourth quarter. On the second spot was PEAK6 Capital Management which amassed $0.2 million worth of shares. Citadel Investment Group was 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 PEAK6 Capital Management allocated the biggest weight to Pioneer Power Solutions, Inc. (NASDAQ:PPSI), around 0.0004% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0003 percent of its 13F equity portfolio to PPSI.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Engineers Gate Manager. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified PPSI as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks similar to Pioneer Power Solutions, Inc. (NASDAQ:PPSI). These stocks are Precipio, Inc. (NASDAQ:PRPO), Skillful Craftsman Education Technology Limited (NASDAQ:EDTK), Mannatech, Inc. (NASDAQ:MTEX), Capitala Finance Corp (NASDAQ:CPTA), Trxade Group, Inc. (NASDAQ:MEDS), Condor Hospitality Trust, Inc. (NASDAQ:CDOR), and Lightbridge Corp (NASDAQ:LTBR). This group of stocks’ market caps resemble PPSI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRPO | 1 | 777 | -1 |
| EDTK | 1 | 43 | 0 |
| MTEX | 1 | 1045 | 0 |
| CPTA | 3 | 864 | 0 |
| MEDS | 2 | 632 | -2 |
| CDOR | 2 | 1307 | 0 |
| LTBR | 1 | 98 | -1 |
| Average | 1.6 | 681 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.6 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in PPSI’s case. Capitala Finance Corp (NASDAQ:CPTA) is the most popular stock in this table. On the other hand Precipio, Inc. (NASDAQ:PRPO) is the least popular one with only 1 bullish hedge fund positions. Pioneer Power Solutions, Inc. (NASDAQ:PPSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PPSI is 76.5. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately PPSI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PPSI were disappointed as the stock returned -5.4% since the end of March (through 6/11) 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.