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Should You Buy Primoris Services Corp (PRIM)?

Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about Primoris Services Corp (NASDAQ:PRIM).

Is Primoris Services Corp (NASDAQ:PRIM) a bargain? The smart money is turning bullish. The number of bullish hedge fund bets moved up by 1 in recent months. Our calculations also showed that PRIM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). PRIM was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. There were 12 hedge funds in our database with PRIM positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most stock holders, hedge funds are seen as worthless, old investment vehicles of the past. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the moguls of this group, about 750 funds. It is estimated that this group of investors have their hands on the lion’s share of the smart money’s total asset base, and by observing their first-class equity investments, Insider Monkey has uncovered various investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Chuck Royce

Chuck Royce of Royce & Associates

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the recent hedge fund action regarding Primoris Services Corp (NASDAQ:PRIM).

Hedge fund activity in Primoris Services Corp (NASDAQ:PRIM)

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PRIM over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PRIM A Good Stock To Buy?

The largest stake in Primoris Services Corp (NASDAQ:PRIM) was held by Divisar Capital, which reported holding $6.7 million worth of stock at the end of September. It was followed by Royce & Associates with a $6.5 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and Algert Coldiron Investors. In terms of the portfolio weights assigned to each position Divisar Capital allocated the biggest weight to Primoris Services Corp (NASDAQ:PRIM), around 2.22% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.56 percent of its 13F equity portfolio to PRIM.

Now, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, created the largest position in Primoris Services Corp (NASDAQ:PRIM). Winton Capital Management had $0.3 million invested in the company at the end of the quarter.

Let’s go over hedge fund activity in other stocks similar to Primoris Services Corp (NASDAQ:PRIM). These stocks are Sandstorm Gold Ltd. (NYSE:SAND), NetGear, Inc. (NASDAQ:NTGR), Controladora Vuela Co Avcn SA CV (NYSE:VLRS), and Esperion Therapeutics (NASDAQ:ESPR). All of these stocks’ market caps resemble PRIM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAND 14 66333 -1
NTGR 19 23465 8
VLRS 8 111630 1
ESPR 15 148350 -1
Average 14 87445 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $28 million in PRIM’s case. NetGear, Inc. (NASDAQ:NTGR) is the most popular stock in this table. On the other hand Controladora Vuela Co Avcn SA CV (NYSE:VLRS) is the least popular one with only 8 bullish hedge fund positions. Primoris Services Corp (NASDAQ:PRIM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on PRIM as the stock returned 12.3% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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