Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside in the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Primoris Services Corp (NASDAQ:PRIM) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Barnes & Noble, Inc. (NYSE:BKS), Gray Television, Inc. (NYSE:GTN), and Q2 Holdings Inc (NYSE:QTWO) to gather more data points.
If you’d ask most shareholders, hedge funds are perceived as worthless, outdated investment vehicles of years past. While there are more than 8,000 funds with their doors open at the moment, we hone in on the leaders of this group, about 700 funds. These hedge fund managers administer the bulk of the smart money’s total capital, and by tracking their unrivaled stock picks, Insider Monkey has unsheathed many investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, let’s analyze the fresh action surrounding Primoris Services Corp (NASDAQ:PRIM).
How have hedgies been trading Primoris Services Corp (NASDAQ:PRIM)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or had already accumulated large positions).
According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Primoris Services Corp (NASDAQ:PRIM). Citadel Investment Group has a $7.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Point72 Asset Management, managed by Steve Cohen, which holds a $5.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish consist of Tim Curro’s Value Holdings LP, Jeffrey Moskowitz’s Harvey Partners, and Roger Ibbotson’s Zebra Capital Management.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions either. This indicates that hedge funds, at the very best, perceive this stock as dead money and haven’t identified any viable catalysts to attract their attention.
Let’s go over hedge fund activity in other stocks similar to Primoris Services Corp (NASDAQ:PRIM). We will take a look at Barnes & Noble, Inc. (NYSE:BKS), Gray Television, Inc. (NYSE:GTN), Q2 Holdings Inc (NYSE:QTWO), and LDR Holding Corp (NASDAQ:LDRH). This group of stocks’ market valuations resemble Primoris Services Corp’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $24 million in Primoris Services Corp’s case. Gray Television, Inc. (NYSE:GTN) is the most popular stock in this table. On the other hand LDR Holding Corp (NASDAQ:LDRH) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Primoris Services Corp (NASDAQ:PRIM) is even less popular than LDR Holding Corp. Considering that hedge funds aren’t nearly as fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.