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 third 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 4 years and analyze what the smart money thinks of Powell Industries, Inc. (NASDAQ:POWL) based on that data.
Powell Industries, Inc. (NASDAQ:POWL) investors should be aware of an increase in hedge fund interest of late. Our calculations also showed that POWL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to go over the new hedge fund action encompassing Powell Industries, Inc. (NASDAQ:POWL).
Hedge fund activity in Powell Industries, Inc. (NASDAQ:POWL)
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 45% from the previous quarter. The graph below displays the number of hedge funds with bullish position in POWL over the last 17 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Powell Industries, Inc. (NASDAQ:POWL), worth close to $23.7 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $6.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of John D. Gillespie’s Prospector Partners, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Powell Industries, Inc. (NASDAQ:POWL), around 0.68% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, earmarking 0.22 percent of its 13F equity portfolio to POWL.
As one would reasonably expect, specific money managers were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Powell Industries, Inc. (NASDAQ:POWL). Marshall Wace had $1.8 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new POWL investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’s Tudor Investment Corp, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Powell Industries, Inc. (NASDAQ:POWL) but similarly valued. These stocks are Turning Point Brands, Inc. (NYSE:TPB), Maxar Technologies Ltd. (NYSE:MAXR), OMNOVA Solutions Inc. (NYSE:OMN), and Sundial Growers Inc. (NASDAQ:SNDL). All of these stocks’ market caps are closest to POWL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TPB | 17 | 39440 | 3 |
| MAXR | 19 | 37391 | 7 |
| OMN | 19 | 96489 | 3 |
| SNDL | 8 | 22374 | 8 |
| Average | 15.75 | 48924 | 5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $48 million in POWL’s case. Maxar Technologies Ltd. (NYSE:MAXR) is the most popular stock in this table. On the other hand Sundial Growers Inc. (NASDAQ:SNDL) is the least popular one with only 8 bullish hedge fund positions. Powell Industries, Inc. (NASDAQ:POWL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on POWL, though not to the same extent, as the stock returned 6.9% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
