Were Hedge Funds Right About Impinj, Inc. (PI)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtImpinj, Inc. (NASDAQ:PI) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Impinj, Inc. (NASDAQ:PI) a buy right now? The smart money was in a pessimistic mood. The number of long hedge fund positions were cut by 2 in recent months. Our calculations also showed that PI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus of Driehaus Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to take a glance at the fresh hedge fund action regarding Impinj, Inc. (NASDAQ:PI).

What have hedge funds been doing with Impinj, Inc. (NASDAQ:PI)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in PI a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Is PI A Good Stock To Buy?

More specifically, Sylebra Capital Management was the largest shareholder of Impinj, Inc. (NASDAQ:PI), with a stake worth $73.5 million reported as of the end of September. Trailing Sylebra Capital Management was Toronado Partners, which amassed a stake valued at $25.9 million. D E Shaw, G2 Investment Partners Management, and Millennium Management 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 Toronado Partners allocated the biggest weight to Impinj, Inc. (NASDAQ:PI), around 8.1% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, earmarking 3.01 percent of its 13F equity portfolio to PI.

Since Impinj, Inc. (NASDAQ:PI) has witnessed bearish sentiment from the smart money, logic holds that there exists a select few money managers that elected to cut their full holdings last quarter. Interestingly, Thomas E. Claugus’s GMT Capital dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $15.6 million in stock. Richard Driehaus’s fund, Driehaus Capital, also said goodbye to its stock, about $8.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Impinj, Inc. (NASDAQ:PI). We will take a look at Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA), Fortuna Silver Mines Inc. (NYSE:FSM), Ruhnn Holding Limited (NASDAQ:RUHN), and ADTRAN, Inc. (NASDAQ:ADTN). This group of stocks’ market valuations are closest to PI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STSA 5 157511 0
FSM 8 33856 -1
RUHN 2 228 0
ADTN 16 43668 3
Average 7.75 58816 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $137 million in PI’s case. ADTRAN, Inc. (NASDAQ:ADTN) is the most popular stock in this table. On the other hand Ruhnn Holding Limited (NASDAQ:RUHN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Impinj, Inc. (NASDAQ:PI) 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 returned 18.6% in 2020 through July 27th but still managed to beat the market by 17.1 percentage points. Hedge funds were also right about betting on PI as the stock returned 81% since Q1 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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