Is PS Stock A Buy or Sell?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. In this article we are going to take a look at smart money sentiment towards Pluralsight, Inc. (NASDAQ:PS).

Is PS stock a buy? Pluralsight, Inc. (NASDAQ:PS) shareholders have witnessed an increase in enthusiasm from smart money lately. Pluralsight, Inc. (NASDAQ:PS) was in 35 hedge funds’ portfolios at the end of December. The all time high for this statistic is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Israel Englander of Millennium Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Keeping this in mind let’s take a peek at the fresh hedge fund action regarding Pluralsight, Inc. (NASDAQ:PS).

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

At fourth quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in PS a year ago. So, let’s examine 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, Eminence Capital, managed by Ricky Sandler, holds the most valuable position in Pluralsight, Inc. (NASDAQ:PS). Eminence Capital has a $104.9 million position in the stock, comprising 1% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $71.1 million position; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism consist of John Orrico’s Water Island Capital, Mina Faltas’s Washington Harbour Partners and Benjamin Pass’s TOMS Capital. In terms of the portfolio weights assigned to each position Akaris Global Partners allocated the biggest weight to Pluralsight, Inc. (NASDAQ:PS), around 13.36% of its 13F portfolio. Washington Harbour Partners is also relatively very bullish on the stock, setting aside 10.7 percent of its 13F equity portfolio to PS.

Now, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in Pluralsight, Inc. (NASDAQ:PS). Millennium Management had $71.1 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also made a $69.8 million investment in the stock during the quarter. The following funds were also among the new PS investors: Mina Faltas’s Washington Harbour Partners, Benjamin Pass’s TOMS Capital, and Israel Englander’s Millennium Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pluralsight, Inc. (NASDAQ:PS) but similarly valued. We will take a look at CNO Financial Group Inc (NYSE:CNO), First Hawaiian, Inc. (NASDAQ:FHB), Merit Medical Systems, Inc. (NASDAQ:MMSI), APi Group Corporation (NYSE:APG), Acacia Communications, Inc. (NASDAQ:ACIA), Bank of Hawaii Corporation (NYSE:BOH), and F.N.B. Corp (NYSE:FNB). This group of stocks’ market values resemble PS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $471 million. That figure was $675 million in PS’s case. Acacia Communications, Inc. (NASDAQ:ACIA) is the most popular stock in this table. On the other hand First Hawaiian, Inc. (NASDAQ:FHB) is the least popular one with only 14 bullish hedge fund positions. Pluralsight, Inc. (NASDAQ:PS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PS is 78.9. 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 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 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately PS wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PS were disappointed as the stock returned 7% since the end of December (through 4/1) 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 many of these stocks already outperformed the market since 2019.

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