Is Profire Energy, Inc. (PFIE) A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Profire Energy, Inc. (NASDAQ:PFIE).

Profire Energy, Inc. (NASDAQ:PFIE) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 10. PFIE shareholders have witnessed an increase in enthusiasm from smart money of late. There were 3 hedge funds in our database with PFIE positions at the end of the second quarter. Our calculations also showed that PFIE 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Jim Simons founder of Renaissance Technologies

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 10 most profitable companies in the world 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. Keeping this in mind we’re going to take a peek at the new hedge fund action encompassing Profire Energy, Inc. (NASDAQ:PFIE).

What does smart money think about Profire Energy, Inc. (NASDAQ:PFIE)?

At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in PFIE a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Profire Energy, Inc. (NASDAQ:PFIE), worth close to $1.6 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Frederick DiSanto’s Ancora Advisors, Ali Motamed’s Invenomic Capital Management and . In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Profire Energy, Inc. (NASDAQ:PFIE), around 0.15% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to PFIE.

As aggregate interest increased, key money managers have been driving this bullishness. Invenomic Capital Management, managed by Ali Motamed, initiated the biggest position in Profire Energy, Inc. (NASDAQ:PFIE). Invenomic Capital Management had $0.3 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks similar to Profire Energy, Inc. (NASDAQ:PFIE). We will take a look at Quest Resource Holding Corp (NASDAQ:QRHC), Comstock Mining, Inc. (NYSE:LODE), NetSol Technologies Inc. (NASDAQ:NTWK), Mannatech, Inc. (NASDAQ:MTEX), Oragenics Inc. (NYSE:OGEN), One Stop Systems, Inc. (NASDAQ:OSS), and KLX Energy Services Holdings, Inc. (NASDAQ:KLXE). This group of stocks’ market values resemble PFIE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QRHC 5 6042 0
LODE 2 927 0
NTWK 3 4344 -1
MTEX 1 841 0
OGEN 2 485 1
OSS 1 150 0
KLXE 7 2384 -5
Average 3 2168 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $3 million in PFIE’s case. KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) is the most popular stock in this table. On the other hand Mannatech, Inc. (NASDAQ:MTEX) is the least popular one with only 1 bullish hedge fund positions. Profire Energy, Inc. (NASDAQ:PFIE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PFIE is 43. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on PFIE as the stock returned 20.5% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Profire Energy Inc (NASDAQ:PFIE)

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