Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about PC Tel Inc (NASDAQ:PCTI) in this article.
Is PCTI a good stock to buy now? PC Tel Inc (NASDAQ:PCTI) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 18. PCTI investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 10 hedge funds in our database with PCTI positions at the end of the second quarter. Our calculations also showed that PCTI isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a peek at the new hedge fund action encompassing PC Tel Inc (NASDAQ:PCTI).
Do Hedge Funds Think PCTI Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in PCTI a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in PC Tel Inc (NASDAQ:PCTI). Renaissance Technologies has a $8.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain Peter Schliemann’s Rutabaga Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John W. Rogers’s Ariel Investments. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to PC Tel Inc (NASDAQ:PCTI), around 1.66% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to PCTI.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bailard Inc. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified PCTI as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PC Tel Inc (NASDAQ:PCTI) but similarly valued. These stocks are Safe Bulkers, Inc. (NYSE:SB), Elevate Credit, Inc. (NYSE:ELVT), Mesa Air Group, Inc. (NASDAQ:MESA), cbdMD, Inc. (NYSE:YCBD), RR Donnelley & Sons Company (NYSE:RRD), Qualigen Therapeutics, Inc. (NASDAQ:QLGN), and Lizhi Inc. (NASDAQ:LIZI). All of these stocks’ market caps are closest to PCTI’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 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $20 million in PCTI’s case. Elevate Credit, Inc. (NYSE:ELVT) is the most popular stock in this table. On the other hand Qualigen Therapeutics, Inc. (NASDAQ:QLGN) is the least popular one with only 1 bullish hedge fund positions. PC Tel Inc (NASDAQ:PCTI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PCTI is 63.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on PCTI as the stock returned 18.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.