PNC Financial Services (NYSE:PNC) has seen a decrease in enthusiasm from smart money recently.
If you'd ask most traders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at present, we hone in on the top tier of this club, about 450 funds. It is widely believed that this group has its hands on most of the smart money's total capital, and by watching their best equity investments, we have discovered a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as important, bullish insider trading activity is another way to break down the investments you're interested in. As the old adage goes: there are a variety of stimuli for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if investors understand what to do (learn more here).
Keeping this in mind, let's take a glance at the recent action encompassing PNC Financial Services (NYSE:PNC).
Heading into 2013, a total of 41 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably.
According to our comprehensive database, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in PNC Financial Services (NYSE:PNC). Pzena Investment Management has a $172 million billion position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is Ric Dillon of Diamond Hill Capital, with a $149 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Clint Carlson's Carlson Capital, Phill Gross and Robert Atchinson's Adage Capital Management and Ken Griffin's Citadel Investment Group.
Due to the fact that PNC Financial Services (NYSE:PNC) has experienced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of fund managers who sold off their positions entirely heading into 2013. It's worth mentioning that John Armitage's Egerton Capital Limited dropped the biggest position of the 450+ funds we watch, comprising an estimated $46 million in stock.. Anand Parekh's fund, Alyeska Investment Group, also sold off its stock, about $31 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity, especially when it's bullish, is best served when the company in question has seen transactions within the past six months. Over the latest six-month time period, PNC Financial Services (NYSE:PNC) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
With the returns exhibited by Insider Monkey's research, retail investors should always keep an eye on hedge fund and insider trading activity, and PNC Financial Services (NYSE:PNC) is an important part of this process.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.