Were Hedge Funds Right About Selling PAR Technology Corporation (PAR)?

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not PAR Technology Corporation (NYSE:PAR) makes for a good investment right now.

PAR Technology Corporation (NYSE:PAR) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. PAR Technology Corporation (NYSE:PAR) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. There were 19 hedge funds in our database with PAR positions at the end of the fourth quarter. Our calculations also showed that PAR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Chuck Royce

Chuck Royce of Royce & Associates

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Do Hedge Funds Think PAR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PAR over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in PAR Technology Corporation (NYSE:PAR) was held by ADW Capital, which reported holding $120 million worth of stock at the end of December. It was followed by Nine Ten Partners with a $91.5 million position. Other investors bullish on the company included Greenhaven Road Investment Management, Royce & Associates, and Isomer Partners. In terms of the portfolio weights assigned to each position ADW Capital allocated the biggest weight to PAR Technology Corporation (NYSE:PAR), around 38.22% of its 13F portfolio. Greenhaven Road Investment Management is also relatively very bullish on the stock, dishing out 14.24 percent of its 13F equity portfolio to PAR.

Seeing as PAR Technology Corporation (NYSE:PAR) has faced falling interest from hedge fund managers, we can see that there exists a select few hedge funds who were dropping their entire stakes last quarter. At the top of the heap, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth about $12.7 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dumped about $0.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PAR Technology Corporation (NYSE:PAR) but similarly valued. We will take a look at OceanFirst Financial Corp. (NASDAQ:OCFC), XPEL Inc. (NASDAQ:XPEL), Keros Therapeutics, Inc. (NASDAQ:KROS), Pitney Bowes Inc. (NYSE:PBI), Stoke Therapeutics, Inc. (NASDAQ:STOK), Kaman Corporation (NYSE:KAMN), and Hailiang Education Group Inc. (NASDAQ:HLG). This group of stocks’ market values match PAR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OCFC 15 62081 2
XPEL 14 100349 2
KROS 15 274909 -1
PBI 21 130085 -1
STOK 15 202726 2
KAMN 14 183420 5
HLG 1 5991 0
Average 13.6 137080 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $427 million in PAR’s case. Pitney Bowes Inc. (NYSE:PBI) is the most popular stock in this table. On the other hand Hailiang Education Group Inc. (NASDAQ:HLG) is the least popular one with only 1 bullish hedge fund positions. PAR Technology Corporation (NYSE:PAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PAR is 64.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately PAR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PAR were disappointed as the stock returned -1.8% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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