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Perceptron, Inc. (PRCP): Hedge Funds In Wait-and-See Mode

In this article we will check out the progression of hedge fund sentiment towards Perceptron, Inc. (NASDAQ:PRCP) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Hedge fund interest in Perceptron, Inc. (NASDAQ:PRCP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PRCP to other stocks including Riot Blockchain, Inc (NASDAQ:RIOT), Kelso Technologies Inc (NYSE:KIQ), and Energous Corporation (NASDAQ:WATT) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most market participants, hedge funds are perceived as slow, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at present, Our experts choose to focus on the leaders of this group, approximately 850 funds. These hedge fund managers preside over bulk of the hedge fund industry’s total asset base, and by monitoring their finest picks, Insider Monkey has found a number of investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

John Rogers Ariel Investments

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the recent hedge fund action surrounding Perceptron, Inc. (NASDAQ:PRCP).

What does smart money think about Perceptron, Inc. (NASDAQ:PRCP)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in PRCP a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Ariel Investments held the most valuable stake in Perceptron, Inc. (NASDAQ:PRCP), which was worth $3.4 million at the end of the third quarter. On the second spot was Harbert Management which amassed $2.8 million worth of shares. Renaissance Technologies, Royce & Associates, and Ancora Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Harbert Management allocated the biggest weight to Perceptron, Inc. (NASDAQ:PRCP), around 4.75% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to PRCP.

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 first quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Perceptron, Inc. (NASDAQ:PRCP) but similarly valued. We will take a look at Riot Blockchain, Inc (NASDAQ:RIOT), Kelso Technologies Inc (NYSE:KIQ), Energous Corporation (NASDAQ:WATT), and Mannatech, Inc. (NASDAQ:MTEX). This group of stocks’ market caps resemble PRCP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RIOT 3 521 1
KIQ 1 10 0
WATT 1 60 -4
MTEX 1 442 0
Average 1.5 258 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.5 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $10 million in PRCP’s case. Riot Blockchain, Inc (NASDAQ:RIOT) is the most popular stock in this table. On the other hand Kelso Technologies Inc (NYSE:KIQ) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Perceptron, Inc. (NASDAQ:PRCP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately PRCP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PRCP were disappointed as the stock returned 4.2% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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