Published on 8 Nov 2021 on Insider Monkey via Yahoo Finance
Was The Smart Money Right About Paysafe Limited (PSFE)?
At Insider Monkey, we pore over the filings of nearly 873 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 June 30th. In this article, we will use that wealth of knowledge to determine whether or not Paysafe Limited (NYSE:PSFE) makes for a good investment right now.
Is Paysafe Limited (NYSE:PSFE) a safe investment now? The smart money was turning bullish. The number of bullish hedge fund bets went up by 9 in recent months. Paysafe Limited (NYSE:PSFE) was in 50 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PSFE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 41 hedge funds in our database with PSFE holdings at the end of March.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.