Hedge Funds Never Been Less Bullish On Personalis, Inc. (PSNL)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Personalis, Inc. (NASDAQ:PSNL) based on those filings.

Personalis, Inc. (NASDAQ:PSNL) investors should be aware of a decrease in hedge fund interest lately. PSNL was in 5 hedge funds’ portfolios at the end of March. There were 10 hedge funds in our database with PSNL positions at the end of the previous quarter. Our calculations also showed that PSNL 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action regarding Personalis, Inc. (NASDAQ:PSNL).

What does smart money think about Personalis, Inc. (NASDAQ:PSNL)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -50% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in PSNL a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Is PSNL A Good Stock To Buy?

The largest stake in Personalis, Inc. (NASDAQ:PSNL) was held by Prosight Capital, which reported holding $3.3 million worth of stock at the end of September. It was followed by Alyeska Investment Group with a $1.8 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and GAMCO Investors. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to Personalis, Inc. (NASDAQ:PSNL), around 1.56% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to PSNL.

Due to the fact that Personalis, Inc. (NASDAQ:PSNL) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few funds that decided to sell off their full holdings heading into Q4. It’s worth mentioning that Samuel Isaly’s OrbiMed Advisors sold off the largest stake of all the hedgies watched by Insider Monkey, comprising about $5.3 million in stock. Stuart J. Zimmer’s fund, Zimmer Partners, also dumped its stock, about $2.2 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Personalis, Inc. (NASDAQ:PSNL) but similarly valued. We will take a look at iRadimed Corporation (NASDAQ:IRMD), Catasys, Inc. (NASDAQ:CATS), Invacare Corporation (NYSE:IVC), and Diamond Offshore Drilling Inc (NYSE:DO). This group of stocks’ market values are similar to PSNL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRMD 14 32146 2
CATS 8 6175 2
IVC 19 62476 4
DO 10 30889 -6
Average 12.75 32922 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $7 million in PSNL’s case. Invacare Corporation (NYSE:IVC) is the most popular stock in this table. On the other hand Catasys, Inc. (NASDAQ:CATS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Personalis, Inc. (NASDAQ:PSNL) is even less popular than CATS. Hedge funds clearly dropped the ball on PSNL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on PSNL as the stock returned 46.7% so far in the second quarter and outperformed the market by an even larger margin.

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