Is PRMW Stock A Buy or Sell?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Primo Water Corporation (NYSE:PRMW) to find out whether there were any major changes in hedge funds’ views.

Is PRMW stock a buy? Primo Water Corporation (NYSE:PRMW) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Primo Water Corporation (NYSE:PRMW) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 36. There were 26 hedge funds in our database with PRMW holdings at the end of September. Our calculations also showed that PRMW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Israel Englander of Millennium Management

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Do Hedge Funds Think PRMW Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PRMW over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

The largest stake in Primo Water Corporation (NYSE:PRMW) was held by Nitorum Capital, which reported holding $165.4 million worth of stock at the end of December. It was followed by Praesidium Investment Management Company with a $125 million position. Other investors bullish on the company included P2 Capital Partners, Millennium Management, and Levin Easterly Partners. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to Primo Water Corporation (NYSE:PRMW), around 10.69% of its 13F portfolio. Praesidium Investment Management Company is also relatively very bullish on the stock, earmarking 6.44 percent of its 13F equity portfolio to PRMW.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Primo Water Corporation (NYSE:PRMW) headfirst. Sachem Head Capital, managed by Scott Ferguson, created the most outsized position in Primo Water Corporation (NYSE:PRMW). Sachem Head Capital had $27 million invested in the company at the end of the quarter. Jaime Sterne’s Skye Global Management also made a $4.3 million investment in the stock during the quarter. The following funds were also among the new PRMW investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Gelband’s ExodusPoint Capital, and Qing Li’s Sciencast Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Primo Water Corporation (NYSE:PRMW) but similarly valued. These stocks are Xencor Inc (NASDAQ:XNCR), AtriCure Inc. (NASDAQ:ATRC), Urban Outfitters, Inc. (NASDAQ:URBN), Myovant Sciences Ltd. (NYSE:MYOV), Equinox Gold Corp. (NYSE:EQX), Ameresco Inc (NYSE:AMRC), and The St. Joe Company (NYSE:JOE). All of these stocks’ market caps are similar to PRMW’s market cap.

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As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $325 million. That figure was $670 million in PRMW’s case. Urban Outfitters, Inc. (NASDAQ:URBN) is the most popular stock in this table. On the other hand The St. Joe Company (NYSE:JOE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Primo Water Corporation (NYSE:PRMW) is more popular among hedge funds. Our overall hedge fund sentiment score for PRMW is 86.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Unfortunately PRMW wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PRMW were disappointed as the stock returned 6.7% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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