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Is PCM, Inc. (PCMI) Going to Burn These Hedge Funds?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards PCM, Inc. (NASDAQ:PCMI).

PCM, Inc. (NASDAQ:PCMI) was in 12 hedge funds’ portfolios at the end of September. PCMI investors should pay attention to an increase in enthusiasm from smart money lately. There were 10 hedge funds in our database with PCMI holdings at the end of the previous quarter. Our calculations also showed that pcmi isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to take a look at the new hedge fund action encompassing PCM, Inc. (NASDAQ:PCMI).

What have hedge funds been doing with PCM, Inc. (NASDAQ:PCMI)?

Heading into the fourth quarter of 2018, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in PCMI at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with PCMI Positions

The largest stake in PCM, Inc. (NASDAQ:PCMI) was held by Royce & Associates, which reported holding $9.2 million worth of stock at the end of September. It was followed by Millennium Management with a $5.3 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and Algert Coldiron Investors.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, initiated the biggest position in PCM, Inc. (NASDAQ:PCMI). D E Shaw had $1 million invested in the company at the end of the quarter. Thomas Bailard’s Bailard Inc also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new PCMI investors: Ken Griffin’s Citadel Investment Group and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks similar to PCM, Inc. (NASDAQ:PCMI). We will take a look at Dreyfus High Yield Strategies Fund (NYSE:DHF), Foamix Pharmaceuticals Ltd (NASDAQ:FOMX), Neuberger Berman Real Estate Securities Income Fund, Inc. (NYSE:NRO), and Town Sports International Holdings, Inc. (NASDAQ:CLUB). This group of stocks’ market caps are closest to PCMI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DHF 2 897 -1
FOMX 19 119632 4
NRO 3 525 2
CLUB 12 110798 0
Average 9 57963 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $19 million in PCMI’s case. Foamix Pharmaceuticals Ltd (NASDAQ:FOMX) is the most popular stock in this table. On the other hand Dreyfus High Yield Strategies Fund (NYSE:DHF) is the least popular one with only 2 bullish hedge fund positions. PCM, Inc. (NASDAQ:PCMI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FOMX might be a better candidate to consider a long position.

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

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