Is Premier Inc (PINC) A Good Stock To Buy?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Premier Inc (NASDAQ:PINC) was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. PINC investors should pay attention to an increase in enthusiasm from smart money lately. There were 14 hedge funds in our database with PINC holdings at the end of the previous quarter. 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 Lifelock Inc (NYSE:LOCK), HMS Holdings Corp. (NASDAQ:HMSY), and Haemonetics Corporation (NYSE:HAE) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Premier Inc (NASDAQ:PINC)?

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 36% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in PINC heading into this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Panayotis Takis Sparaggis’ Alkeon Capital Management has the biggest position in Premier Inc (NASDAQ:PINC), worth close to $70.2 million, amounting to 1.3% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies, which holds a $51 million position. Remaining peers that hold long positions include Greg Poole’s Echo Street Capital Management, and George McCabe’s Portolan Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, specific money managers have been driving this bullishness. Welch Capital Partners, led by Leighton Welch, initiated the biggest position in Premier Inc (NASDAQ:PINC). Welch Capital Partners had $11.9 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $2.2 million position during the quarter. The other funds with brand new PINC positions are Mike Vranos’ Ellington, Brian Taylor’s Pine River Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Premier Inc (NASDAQ:PINC). We will take a look at Lifelock Inc (NYSE:LOCK), HMS Holdings Corp. (NASDAQ:HMSY), Haemonetics Corporation (NYSE:HAE), and Globe Specialty Metals, Inc. (NASDAQ:GSM). This group of stocks’ market values are closest to PINC’s market value.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $207 million in PINC’s case. Lifelock Inc (NYSE:LOCK) is the most popular stock in this table. On the other hand Haemonetics Corporation (NYSE:HAE) is the least popular one with only 16 bullish hedge fund positions. Premier Inc (NASDAQ:PINC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LOCK might be a better candidate to consider taking a long position in.

Disclosure: None