We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards PerkinElmer, Inc. (NYSE:PKI) and determine whether hedge funds skillfully traded this stock.
Is PerkinElmer, Inc. (NYSE:PKI) a buy here? Hedge funds were in a bearish mood. The number of bullish hedge fund bets shrunk by 1 recently. PerkinElmer, Inc. (NYSE:PKI) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that PKI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 32 hedge funds in our database with PKI holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a gander at the new hedge fund action regarding PerkinElmer, Inc. (NYSE:PKI).
Kamran Moghtaderi of Eversept Partners
Do Hedge Funds Think PKI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 36 hedge funds with a bullish position in PKI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of PerkinElmer, Inc. (NYSE:PKI), with a stake worth $1298.8 million reported as of the end of September. Trailing Select Equity Group was Impax Asset Management, which amassed a stake valued at $193.6 million. Echo Street Capital Management, AQR Capital Management, and Balyasny Asset Management 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 Select Equity Group allocated the biggest weight to PerkinElmer, Inc. (NYSE:PKI), around 4.36% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, setting aside 2.49 percent of its 13F equity portfolio to PKI.
Because PerkinElmer, Inc. (NYSE:PKI) has witnessed falling interest from the smart money, logic holds that there is a sect of hedgies that decided to sell off their full holdings in the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the biggest stake of the 750 funds tracked by Insider Monkey, worth about $51.3 million in stock. Jaime Sterne’s fund, Skye Global Management, also cut its stock, about $1.7 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to PerkinElmer, Inc. (NYSE:PKI). These stocks are International Paper Company (NYSE:IP), Kellogg Company (NYSE:K), KE Holdings Inc (NYSE:BEKE), Ventas, Inc. (NYSE:VTR), McCormick & Company, Incorporated (NYSE:MKC), DTE Energy Company (NYSE:DTE), and FleetCor Technologies, Inc. (NYSE:FLT). This group of stocks’ market valuations are closest to PKI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IP | 30 | 263108 | -1 |
| K | 22 | 290019 | -10 |
| BEKE | 26 | 1740683 | -5 |
| VTR | 23 | 464641 | -2 |
| MKC | 35 | 1782097 | 1 |
| DTE | 22 | 426119 | -10 |
| FLT | 31 | 2095712 | -9 |
| Average | 27 | 1008911 | -5.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1009 million. That figure was $1921 million in PKI’s case. McCormick & Company, Incorporated (NYSE:MKC) is the most popular stock in this table. On the other hand Kellogg Company (NYSE:K) is the least popular one with only 22 bullish hedge fund positions. PerkinElmer, Inc. (NYSE:PKI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PKI is 64.4. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on PKI as the stock returned -0.6% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
