Is Primoris Services Corp (PRIM) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Primoris Services Corp (NASDAQ:PRIM) .

Hedge fund interest in Primoris Services Corp (NASDAQ:PRIM) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Mpg Office Trust Inc (NYSE:MPG), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), and MBIA Inc. (NYSE:MBI) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Keeping this in mind, we’re going to review the key action encompassing Primoris Services Corp (NASDAQ:PRIM).

Hedge fund activity in Primoris Services Corp (NASDAQ:PRIM)

At Q3’s end, a total of 8 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, 0 hedge funds held shares or bullish call options in PRIM 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.

Of the funds tracked by Insider Monkey, Tim Curro’s Value Holdings LP has the largest position in Primoris Services Corp (NASDAQ:PRIM), worth close to $7 million, amounting to 4.1% of its total 13F portfolio. On Value Holdings LP’s heels is Ken Grossman and Glen Schneider of SG Capital Management, with a $5.3 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Mark Coe’s Coe Capital Management, Ken Griffin’s Citadel Investment Group and Renaissance Technologies, one of the largest hedge funds in the world. We should note that two of these hedge funds (Value Holdings LP and SG Capital Management) 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.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. It’s worth mentioning that Israel Englander’s Millennium Management cut the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $3.3 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund dropped about $0.4 million worth of shares.

Let’s also examine hedge fund activity in other stocks similar to Primoris Services Corp (NASDAQ:PRIM). These stocks are Mpg Office Trust Inc (NYSE:MPG), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), MBIA Inc. (NYSE:MBI), and Tutor Perini Corp (NYSE:TPC). All of these stocks’ market caps are similar to PRIM’s market cap.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $27 million in PRIM’s case. MBIA Inc. (NYSE:MBI) is the most popular stock in this table. On the other hand Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Primoris Services Corp (NASDAQ:PRIM) is even less popular than AAWW. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None