Is Quanta Services Inc (PWR) Going to Burn These Hedge Funds?

In this article we will analyze whether Quanta Services Inc (NYSE:PWR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Quanta Services Inc (NYSE:PWR) the right investment to pursue these days? Hedge funds were in a bullish mood. The number of bullish hedge fund bets increased by 7 recently. Quanta Services Inc (NYSE:PWR) was in 40 hedge funds’ portfolios at the end of June. The all time high for this statistic is 44. Our calculations also showed that PWR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 33 hedge funds in our database with PWR holdings at the end of March.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

William Harnisch

William Harnisch of Peconic Partners LLC

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. 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 homepage. Keeping this in mind let’s view the latest hedge fund action surrounding Quanta Services Inc (NYSE:PWR).

Do Hedge Funds Think PWR Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PWR over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Peconic Partners LLC, managed by William Harnisch, holds the biggest position in Quanta Services Inc (NYSE:PWR). Peconic Partners LLC has a $513.4 million position in the stock, comprising 51.4% of its 13F portfolio. Sitting at the No. 2 spot is Suvretta Capital Management, led by Aaron Cowen, holding a $115.2 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other peers that are bullish comprise Jos Shaver’s Electron Capital Partners, Ken Griffin’s Citadel Investment Group and John Smith Clark’s Southpoint Capital Advisors. In terms of the portfolio weights assigned to each position Peconic Partners LLC allocated the biggest weight to Quanta Services Inc (NYSE:PWR), around 51.38% of its 13F portfolio. Appian Way Asset Management is also relatively very bullish on the stock, earmarking 5.36 percent of its 13F equity portfolio to PWR.

As one would reasonably expect, key money managers were leading the bulls’ herd. Cartenna Capital, managed by Peter Avellone, initiated the largest position in Quanta Services Inc (NYSE:PWR). Cartenna Capital had $6.8 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also made a $5.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, Noam Gottesman’s GLG Partners, and Steve Pattyn’s Yaupon Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Quanta Services Inc (NYSE:PWR) but similarly valued. We will take a look at Steel Dynamics, Inc. (NASDAQ:STLD), Fidelity National Financial Inc (NYSE:FNF), Atmos Energy Corporation (NYSE:ATO), Guardant Health, Inc. (NASDAQ:GH), The Boston Beer Company Inc (NYSE:SAM), American Homes 4 Rent (NYSE:AMH), and Allegion plc (NYSE:ALLE). This group of stocks’ market values resemble PWR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STLD 26 538358 0
FNF 34 1303820 -5
ATO 18 83813 3
GH 49 1708966 8
SAM 42 933501 13
AMH 31 757590 4
ALLE 37 1202742 10
Average 33.9 932684 4.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $933 million. That figure was $945 million in PWR’s case. Guardant Health, Inc. (NASDAQ:GH) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 18 bullish hedge fund positions. Quanta Services Inc (NYSE:PWR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PWR is 72.8. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on PWR as the stock returned 22.5% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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