Hedge Funds Are Piling Into Impinj, Inc. (PI)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Impinj, Inc. (NASDAQ:PI) based on that data and determine whether they were really smart about the stock.

Impinj, Inc. (NASDAQ:PI) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Impinj, Inc. (NASDAQ:PI) was in 22 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 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.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind let’s review the recent hedge fund action regarding Impinj, Inc. (NASDAQ:PI).

What does smart money think about Impinj, Inc. (NASDAQ:PI)?

At Q2’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PI over the last 20 quarters. 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, Sylebra Capital Management held the most valuable stake in Impinj, Inc. (NASDAQ:PI), which was worth $120.8 million at the end of the third quarter. On the second spot was Toronado Partners which amassed $41.7 million worth of shares. D E Shaw, Two Sigma Advisors, and Polar Capital 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 Toronado Partners allocated the biggest weight to Impinj, Inc. (NASDAQ:PI), around 10.88% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, dishing out 3.76 percent of its 13F equity portfolio to PI.

As industrywide interest jumped, key money managers have been driving this bullishness. AlphaCrest Capital Management, managed by Mika Toikka, assembled the largest position in Impinj, Inc. (NASDAQ:PI). AlphaCrest Capital Management had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new PI investors: Thyra Zerhusen’s Fairpointe Capital, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Impinj, Inc. (NASDAQ:PI) but similarly valued. We will take a look at Boot Barn Holdings Inc (NYSE:BOOT), Kelly Services, Inc. (NASDAQ:KELYA), MGP Ingredients Inc (NASDAQ:MGPI), BELLUS Health Inc. (NASDAQ:BLU), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), and Liberty Oilfield Services Inc. (NYSE:LBRT). All of these stocks’ market caps resemble PI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BOOT 13 19466 -7
KELYA 11 11905 -2
MGPI 13 21567 2
BLU 17 141027 3
MCRI 14 75315 -1
SPWH 33 151707 7
LBRT 6 7305 -6
Average 15.3 61185 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $207 million in PI’s case. Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) is the most popular stock in this table. On the other hand Liberty Oilfield Services Inc. (NYSE:LBRT) is the least popular one with only 6 bullish hedge fund positions. Impinj, Inc. (NASDAQ:PI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PI is 68.6. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately PI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PI were disappointed as the stock returned -4.1% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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