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Is Primo Water Corporation (PRMW) Worthy of Your Portfolio?

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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.

In this article, we are going to take a closer look at  Primo Water Corporation (NASDAQ:PRMW), in which the hedge fund sentiment remained flat last quarter. This is usually a negative indicator, although 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 Natural Gas Services Group, Inc. (NYSE:NGS), THL Credit, Inc. (NASDAQ:TCRD), and Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) to gather more data points.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Keeping this in mind, we’re going to view the key action surrounding Primo Water Corporation (NASDAQ:PRMW).

How have hedgies been trading Primo Water Corporation (NASDAQ:PRMW)?

At the end of the third quarter, 17 funds tracked by Insider Monkey held long positions in Primi Water Corporation, unchanged over the quarter. Below, you can check out the change in hedge fund sentiment towards PRMW over the last five quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

PRMW Chart

When looking at the institutional investors followed by Insider Monkey, Manatuck Hill Partners, led by Mark Broach, holds the number one position in Primo Water Corporation (NASDAQ:PRMW). Manatuck Hill Partners has a $21.6 million position in the stock, comprising 8.6% of its 13F portfolio. The second largest stake is held by Charles Akre’s Akre Capital Management, with a $20.4 million position; 0.4% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Renaissance Technologies, one of the largest hedge funds in the world, Ken Grossman and Glen Schneider’s SG Capital Management, and Richard Driehaus’ Driehaus Capital. We should note that SG Capital Management is 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.

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