Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Quanta Services Inc (NYSE:PWR) in this article.
Hedge fund interest in Quanta Services Inc (NYSE:PWR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PWR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 RH (NYSE:RH), Cna Financial Corporation (NYSE:CNA), and Signature Bank (NASDAQ:SBNY) to gather more data points.
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William Harnisch of Peconic Partners LLC
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Now let’s analyze the key hedge fund action regarding Quanta Services Inc (NYSE:PWR).
Do Hedge Funds Think PWR Is A Good Stock To Buy Now?
At Q1’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PWR over the last 23 quarters. 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, William Harnisch’s Peconic Partners LLC has the number one position in Quanta Services Inc (NYSE:PWR), worth close to $500 million, accounting for 52.4% of its total 13F portfolio. Sitting at the No. 2 spot is Suvretta Capital Management, managed by Aaron Cowen, which holds a $99.5 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions comprise Jos Shaver’s Electron Capital Partners, John Smith Clark’s Southpoint Capital Advisors and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Peconic Partners LLC allocated the biggest weight to Quanta Services Inc (NYSE:PWR), around 52.45% of its 13F portfolio. Appian Way Asset Management is also relatively very bullish on the stock, designating 5.55 percent of its 13F equity portfolio to PWR.
Because Quanta Services Inc (NYSE:PWR) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies who sold off their full holdings heading into Q2. At the top of the heap, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management cut the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $242.7 million in stock. Edgar Wachenheim’s fund, Greenhaven Associates, also sold off its stock, about $15.7 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Quanta Services Inc (NYSE:PWR) but similarly valued. These stocks are RH (NYSE:RH), Cna Financial Corporation (NYSE:CNA), Signature Bank (NASDAQ:SBNY), Graco Inc. (NYSE:GGG), Atmos Energy Corporation (NYSE:ATO), Chegg Inc (NYSE:CHGG), and Annaly Capital Management, Inc. (NYSE:NLY). This group of stocks’ market valuations are similar to PWR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RH | 50 | 2992390 | 8 |
| CNA | 19 | 74356 | 3 |
| SBNY | 40 | 925856 | 12 |
| GGG | 25 | 327418 | 0 |
| ATO | 15 | 172475 | -10 |
| CHGG | 33 | 672189 | 0 |
| NLY | 15 | 140155 | -6 |
| Average | 28.1 | 757834 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $758 million. That figure was $897 million in PWR’s case. RH (NYSE:RH) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 15 bullish hedge fund positions. Quanta Services Inc (NYSE:PWR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PWR is 53.2. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately PWR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PWR were disappointed as the stock returned 1.9% since the end of March (through 7/2) 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.
Follow Quanta Services Inc. (NYSE:PWR)
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Disclosure: None. This article was originally published at Insider Monkey.
