In this article we will check out the progression of hedge fund sentiment towards Parsons Corporation (NYSE:PSN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Parsons Corporation (NYSE:PSN) has seen an increase in hedge fund interest in recent months. PSN was in 15 hedge funds’ portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with PSN holdings at the end of the previous quarter. Our calculations also showed that PSN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
In the 21st century investor’s toolkit there are a multitude of metrics investors use to assess publicly traded companies. A couple of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the broader indices by a superb amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 easiest remote jobs that pay well to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Parsons Corporation (NYSE:PSN).
Hedge fund activity in Parsons Corporation (NYSE:PSN)
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the fourth quarter of 2019. On the other hand, there were a total of 0 hedge funds with a bullish position in PSN a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Alkeon Capital Management was the largest shareholder of Parsons Corporation (NYSE:PSN), with a stake worth $39.6 million reported as of the end of September. Trailing Alkeon Capital Management was Sunriver Management, which amassed a stake valued at $28.3 million. Citadel Investment Group, Brant Point Investment Management, and Arrowstreet 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 Sunriver Management allocated the biggest weight to Parsons Corporation (NYSE:PSN), around 4.96% of its 13F portfolio. ACK Asset Management is also relatively very bullish on the stock, designating 0.84 percent of its 13F equity portfolio to PSN.
Consequently, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Parsons Corporation (NYSE:PSN). Arrowstreet Capital had $3.1 million invested in the company at the end of the quarter. Richard S. Meisenberg’s ACK Asset Management also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Renaissance Technologies, and Steve Cohen’s Point72 Asset Management.
Let’s now review hedge fund activity in other stocks similar to Parsons Corporation (NYSE:PSN). We will take a look at Cemex SAB de CV (NYSE:CX), L Brands Inc (NYSE:LB), Pure Storage, Inc. (NYSE:PSTG), and FirstService Corporation (TSE:FSV). All of these stocks’ market caps match PSN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $369 million. That figure was $93 million in PSN’s case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Cemex SAB de CV (NYSE:CX) is the least popular one with only 12 bullish hedge fund positions. Parsons Corporation (NYSE:PSN) 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. 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately PSN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PSN investors were disappointed as the stock returned 13.3% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.