Were Hedge Funds Right About Perficient, Inc. (PRFT)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Perficient, Inc. (NASDAQ:PRFT) 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.

Perficient, Inc. (NASDAQ:PRFT) was in 23 hedge funds’ portfolios at the end of December. PRFT has seen an increase in support from the world’s most elite money managers in recent months. There were 15 hedge funds in our database with PRFT holdings at the end of the previous quarter. Our calculations also showed that PRFT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the 21st century investor’s toolkit there are a large number of gauges stock traders employ to value publicly traded companies. Two of the most under-the-radar gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outclass the broader indices by a solid margin (see the details here).

Richard Driehaus of Driehaus Capital

We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the recent hedge fund action surrounding Perficient, Inc. (NASDAQ:PRFT).

How are hedge funds trading Perficient, Inc. (NASDAQ:PRFT)?

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 53% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PRFT over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Driehaus Capital held the most valuable stake in Perficient, Inc. (NASDAQ:PRFT), which was worth $27.1 million at the end of the third quarter. On the second spot was GLG Partners which amassed $14.1 million worth of shares. SG Capital Management, Citadel Investment Group, and Manatuck Hill Partners 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 Manatuck Hill Partners allocated the biggest weight to Perficient, Inc. (NASDAQ:PRFT), around 3.74% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 1.81 percent of its 13F equity portfolio to PRFT.

As aggregate interest increased, key money managers were breaking ground themselves. SG Capital Management, managed by Ken Grossman and Glen Schneider, assembled the biggest position in Perficient, Inc. (NASDAQ:PRFT). SG Capital Management had $9.2 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also made a $5.5 million investment in the stock during the quarter. The other funds with brand new PRFT positions are Renaissance Technologies, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Minhua Zhang’s Weld Capital Management.

Let’s now review hedge fund activity in other stocks similar to Perficient, Inc. (NASDAQ:PRFT). We will take a look at Inogen Inc (NASDAQ:INGN), Office Depot Inc (NASDAQ:ODP), Tri Continental Corporation (NYSE:TY), and Compass Diversified Holdings LLC (NYSE:CODI). This group of stocks’ market values are similar to PRFT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INGN 21 169724 4
ODP 16 104972 0
TY 2 1464 1
CODI 6 7893 1
Average 11.25 71013 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $95 million in PRFT’s case. Inogen Inc (NASDAQ:INGN) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Perficient, Inc. (NASDAQ:PRFT) 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 1.0% in 2020 through May 1st and still beat the market by 12.9 percentage points. Unfortunately PRFT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PRFT were disappointed as the stock returned -28.2% during the four months of 2020 (through May 1st) 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.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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