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 Perdoceo Education Corporation (NASDAQ:PRDO) in this article.
Is Perdoceo Education Corporation (NASDAQ:PRDO) ready to rally soon? Money managers were betting on the stock. The number of bullish hedge fund positions rose by 7 in recent months. Perdoceo Education Corporation (NASDAQ:PRDO) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PRDO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 17 hedge funds in our database with PRDO holdings at the end of December.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Now we’re going to go over the new hedge fund action encompassing Perdoceo Education Corporation (NASDAQ:PRDO).
Do Hedge Funds Think PRDO Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from the fourth quarter of 2020. By comparison, 23 hedge funds held shares or bullish call options in PRDO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Perdoceo Education Corporation (NASDAQ:PRDO), which was worth $62.9 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $17.5 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and Lonestar Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lonestar Capital Management allocated the biggest weight to Perdoceo Education Corporation (NASDAQ:PRDO), around 0.89% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.41 percent of its 13F equity portfolio to PRDO.
Now, specific money managers were leading the bulls’ herd. Intrinsic Edge Capital, managed by Mark Coe, assembled the most outsized position in Perdoceo Education Corporation (NASDAQ:PRDO). Intrinsic Edge Capital had $2.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are Bernard Horn’s Polaris Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Roger Ibbotson’s Zebra Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Perdoceo Education Corporation (NASDAQ:PRDO) but similarly valued. We will take a look at Argan, Inc. (NYSE:AGX), Echo Global Logistics, Inc. (NASDAQ:ECHO), DMC Global Inc. (NASDAQ:BOOM), Gogo Inc (NASDAQ:GOGO), Seacor Holdings, Inc. (NYSE:CKH), Nicolet Bankshares Inc. (NASDAQ:NCBS), and The Lovesac Company (NASDAQ:LOVE). This group of stocks’ market valuations are similar to PRDO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGX | 12 | 61166 | -2 |
| ECHO | 16 | 34202 | 1 |
| BOOM | 8 | 21698 | 0 |
| GOGO | 18 | 172004 | 5 |
| CKH | 15 | 121871 | -5 |
| NCBS | 3 | 1954 | -1 |
| LOVE | 18 | 109630 | 4 |
| Average | 12.9 | 74646 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $122 million in PRDO’s case. Gogo Inc (NASDAQ:GOGO) is the most popular stock in this table. On the other hand Nicolet Bankshares Inc. (NASDAQ:NCBS) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Perdoceo Education Corporation (NASDAQ:PRDO) is more popular among hedge funds. Our overall hedge fund sentiment score for PRDO is 90. 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 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately PRDO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PRDO were disappointed as the stock returned -4.1% since the end of the first quarter (through 7/16) 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.
Follow Perdoceo Education Corp (NASDAQ:PRDO)
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Disclosure: None. This article was originally published at Insider Monkey.
