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Were Hedge Funds Right About Flocking Into Pluralsight, Inc. (PS) ?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Pluralsight, Inc. (NASDAQ:PS).

Pluralsight, Inc. (NASDAQ:PS) shareholders have witnessed an increase in enthusiasm from smart money lately. Our calculations also showed that ps isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Dmitry Balyasny

Let’s check out the key hedge fund action surrounding Pluralsight, Inc. (NASDAQ:PS).

Hedge fund activity in Pluralsight, Inc. (NASDAQ:PS)

At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PS over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds With PS Positions

Among these funds, Whale Rock Capital Management held the most valuable stake in Pluralsight, Inc. (NASDAQ:PS), which was worth $48.1 million at the end of the third quarter. On the second spot was Engle Capital which amassed $14.1 million worth of shares. Moreover, Nishkama Capital, Balyasny Asset Management, and Diker Management were also bullish on Pluralsight, Inc. (NASDAQ:PS), allocating a large percentage of their portfolios to this stock.

Now, specific money managers were leading the bulls’ herd. Nishkama Capital, managed by Ravee Mehta, initiated the most outsized position in Pluralsight, Inc. (NASDAQ:PS). Nishkama Capital had $7.4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $5.5 million position during the quarter. The other funds with new positions in the stock are Charles Clough’s Clough Capital Partners, Matthew Halbower’s Pentwater Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pluralsight, Inc. (NASDAQ:PS) but similarly valued. These stocks are Paylocity Holding Corp (NASDAQ:PCTY), FirstCash, Inc. (NASDAQ:FCFS), Black Stone Minerals LP (NYSE:BSM), and Darling Ingredients Inc. (NYSE:DAR). All of these stocks’ market caps are similar to PS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PCTY 14 106409 -8
FCFS 12 130903 -4
BSM 5 10666 0
DAR 18 260731 -1
Average 12.25 127177 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $93 million in PS’s case. Darling Ingredients Inc. (NYSE:DAR) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 5 bullish hedge fund positions. Pluralsight, Inc. (NASDAQ:PS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on PS as the stock returned 37.5% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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