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Were Hedge Funds Right About PerkinElmer, Inc. (PKI)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. 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 we look at how hedge funds traded PerkinElmer, Inc. (NYSE:PKI) and determine whether the smart money was really smart about this stock.

Is PerkinElmer, Inc. (NYSE:PKI) a buy here? Hedge funds were getting more bullish. The number of long hedge fund positions advanced by 1 recently. Our calculations also showed that PKI 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.

At the moment there are dozens of metrics stock traders have at their disposal to grade stocks. A pair of the most innovative metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best money managers can outperform their index-focused peers by a very impressive amount (see the details here).

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world 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 analyze the key hedge fund action surrounding PerkinElmer, Inc. (NYSE:PKI).

What have hedge funds been doing with PerkinElmer, Inc. (NYSE:PKI)?

At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PKI over the last 18 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.

Among these funds, Select Equity Group held the most valuable stake in PerkinElmer, Inc. (NYSE:PKI), which was worth $438.5 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $91.9 million worth of shares. Echo Street Capital Management, Adage Capital 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 Select Equity Group allocated the biggest weight to PerkinElmer, Inc. (NYSE:PKI), around 3.02% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, setting aside 1.62 percent of its 13F equity portfolio to PKI.

As aggregate interest increased, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, established the biggest position in PerkinElmer, Inc. (NYSE:PKI). Millennium Management had $8.1 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Bhagwan Jay Rao’s Integral Health Asset Management, Mika Toikka’s AlphaCrest Capital Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks similar to PerkinElmer, Inc. (NYSE:PKI). These stocks are Autohome Inc (NYSE:ATHM), Carvana Co. (NYSE:CVNA), Lamb Weston Holdings, Inc. (NYSE:LW), and Phillips 66 Partners LP (NYSE:PSXP). All of these stocks’ market caps resemble PKI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATHM 15 708219 2
CVNA 52 1819908 -1
LW 29 277239 -3
PSXP 5 13913 0
Average 25.25 704820 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $705 million. That figure was $648 million in PKI’s case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. PerkinElmer, Inc. (NYSE:PKI) is not the least popular stock in this group but hedge fund interest is still below average. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on PKI as the stock returned 53% since the end of March and outperformed the market by an even larger margin.

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