Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Perion Network Ltd (NASDAQ:PERI) in this article.
Is Perion Network (PERI) a good stock to buy now? PERI investors should pay attention to an increase in hedge fund sentiment in recent months. Perion Network Ltd (NASDAQ:PERI) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 5 hedge funds in our database with PERI positions at the end of the second quarter. Our calculations also showed that PERI isn't among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Now we're going to go over the latest hedge fund action surrounding Perion Network Ltd (NASDAQ:PERI).
What does smart money think about Perion Network Ltd (NASDAQ:PERI)?
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PERI over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Gregg J. Powers's Private Capital Management has the largest position in Perion Network Ltd (NASDAQ:PERI), worth close to $14.2 million, comprising 3.3% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $13.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain John Overdeck and David Siegel's Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Private Capital Management allocated the biggest weight to Perion Network Ltd (NASDAQ:PERI), around 3.26% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to PERI.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Perion Network Ltd (NASDAQ:PERI). Arrowstreet Capital had $0.3 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new PERI investors: Peter Muller's PDT Partners and Greg Eisner's Engineers Gate Manager.
Let's also examine hedge fund activity in other stocks similar to Perion Network Ltd (NASDAQ:PERI). We will take a look at Liquidia Corporation (NASDAQ:LQDA), Overseas Shipholding Group, Inc. (NYSE:OSG), Flexsteel Industries, Inc. (NASDAQ:FLXS), Luna Innovations Incorporated (NASDAQ:LUNA), VOXX International Corp (NASDAQ:VOXX), Ocwen Financial Corporation (NYSE:OCN), and Quantum Corporation (NASDAQ:QMCO). All of these stocks' market caps are closest to PERI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LQDA,10,25209,-6 OSG,11,39199,-1 FLXS,9,40282,-4 LUNA,11,26088,1 VOXX,7,35232,1 OCN,8,35212,-9 QMCO,7,4792,1 Average,9,29431,-2.4 [/table]
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $29 million in PERI's case. Overseas Shipholding Group, Inc. (NYSE:OSG) is the most popular stock in this table. On the other hand VOXX International Corp (NASDAQ:VOXX) is the least popular one with only 7 bullish hedge fund positions. Perion Network Ltd (NASDAQ:PERI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PERI is 50.5. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately PERI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PERI investors were disappointed as the stock returned 8.9% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
