Quanta Services Inc (PWR) Fell Out Of Favor With Hedge Funds

In this article we will take a look at whether hedge funds think Quanta Services Inc (NYSE:PWR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Quanta Services Inc (NYSE:PWR) was in 38 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. PWR investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 40 hedge funds in our database with PWR positions at the end of the second quarter. Our calculations also showed that PWR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a look at the key hedge fund action surrounding Quanta Services Inc (NYSE:PWR).

William Harnisch

William Harnisch of Peconic Partners LLC

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

At the end of September, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in PWR a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, William Harnisch’s Peconic Partners LLC has the number one position in Quanta Services Inc (NYSE:PWR), worth close to $633.4 million, corresponding to 56.2% of its total 13F portfolio. The second largest stake is held by 40 North Management, led by David S. Winter and David J. Millstone, holding a $175.6 million position; 5.4% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions contain Aaron Cowen’s Suvretta Capital Management, Jos Shaver’s Electron Capital Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Peconic Partners LLC allocated the biggest weight to Quanta Services Inc (NYSE:PWR), around 56.2% of its 13F portfolio. Electron Capital Partners is also relatively very bullish on the stock, earmarking 5.76 percent of its 13F equity portfolio to PWR.

Due to the fact that Quanta Services Inc (NYSE:PWR) has faced declining sentiment from hedge fund managers, it’s easy to see that there were a few hedgies who sold off their full holdings last quarter. Interestingly, Steve Cohen’s Point72 Asset Management cut the largest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $10.9 million in stock, and Peter Avellone’s Cartenna Capital was right behind this move, as the fund cut about $6.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.

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 IDEX Corporation (NYSE:IEX), UDR, Inc. (NYSE:UDR), The Liberty SiriusXM Group (NASDAQ:LSXMA), Textron Inc. (NYSE:TXT), Brown & Brown, Inc. (NYSE:BRO), Omnicom Group Inc. (NYSE:OMC), and Confluent Inc. (NASDAQ:CFLT). All of these stocks’ market caps resemble PWR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IEX 18 1047528 -4
UDR 20 353763 -4
LSXMA 44 1901086 1
TXT 31 1137475 9
BRO 31 1392156 5
OMC 25 396360 -5
CFLT 27 1319263 27
Average 28 1078233 4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1078 million. That figure was $1527 million in PWR’s case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) 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 67.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately PWR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PWR were disappointed as the stock returned 0% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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