Is PyroGenesis Canada Inc. (PYR) A Good Stock To Buy?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards PyroGenesis Canada Inc. (NASDAQ:PYR).

Is PYR a good stock to buy? Investors who are in the know were buying. The number of bullish hedge fund bets rose by 3 lately. PyroGenesis Canada Inc. (NASDAQ:PYR) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that PYR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Cathie Wood of ARK Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a peek at the fresh hedge fund action regarding PyroGenesis Canada Inc. (NASDAQ:PYR).

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

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PYR 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.

The largest stake in PyroGenesis Canada Inc. (NASDAQ:PYR) was held by ARK Investment Management, which reported holding $1.4 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $0.2 million position. The only other hedge fund that is bullish on the company was Paloma Partners.

As one would reasonably expect, specific money managers were leading the bulls’ herd. ARK Investment Management, managed by Catherine D. Wood, established the largest position in PyroGenesis Canada Inc. (NASDAQ:PYR). ARK Investment Management had $1.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new PYR position is Donald Sussman’s Paloma Partners.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PyroGenesis Canada Inc. (NASDAQ:PYR) but similarly valued. We will take a look at Anavex Life Sciences Corp. (NASDAQ:AVXL), Curis, Inc. (NASDAQ:CRIS), John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), Scholastic Corp (NASDAQ:SCHL), Vine Energy Inc. (NYSE:VEI), EverQuote, Inc. (NASDAQ:EVER), and Veeco Instruments Inc. (NASDAQ:VECO). This group of stocks’ market valuations are similar to PYR’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $2 million in PYR’s case. Curis, Inc. (NASDAQ:CRIS) is the most popular stock in this table. On the other hand Anavex Life Sciences Corp. (NASDAQ:AVXL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks PyroGenesis Canada Inc. (NASDAQ:PYR) is even less popular than AVXL. Our overall hedge fund sentiment score for PYR is 8. 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. Hedge funds dodged a bullet by taking a bearish stance towards PYR. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market again by 3.3 percentage points. Unfortunately PYR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); PYR investors were disappointed as the stock returned -18.6% since the end of the first quarter (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 most of these stocks already outperformed the market since 2019.

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