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Pembina Pipeline Corp (PBA): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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Pembina Pipeline Corp (NYSE:PBA) was in 8 hedge funds’ portfolio at the end of March. PBA has experienced an increase in enthusiasm from smart money in recent months. There were 6 hedge funds in our database with PBA holdings at the end of the previous quarter.

In the eyes of most shareholders, hedge funds are seen as unimportant, old financial vehicles of the past. While there are more than 8000 funds with their doors open at the moment, we choose to focus on the crème de la crème of this group, close to 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total asset base, and by watching their highest performing equity investments, we have unsheathed a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, bullish insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are lots of stimuli for a corporate insider to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this strategy if investors know where to look (learn more here).

Now, let’s take a glance at the key action encompassing Pembina Pipeline Corp (NYSE:PBA).

How are hedge funds trading Pembina Pipeline Corp (NYSE:PBA)?

In preparation for this quarter, a total of 8 of the hedge funds we track held long positions in this stock, a change of 33% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully.

Pembina Pipeline Corp (NYSE:PBA)When looking at the hedgies we track, D. E. Shaw’s D E Shaw had the most valuable position in Pembina Pipeline Corp (NYSE:PBA), worth close to $10.3 million, comprising less than 0.1%% of its total 13F portfolio. On D E Shaw’s heels is 3G Capital, managed by Jorge Paulo Lemann, which held a $9.5 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.

Consequently, specific money managers were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, established the biggest position in Pembina Pipeline Corp (NYSE:PBA). D E Shaw had 10.3 million invested in the company at the end of the quarter. Jorge Paulo Lemann’s 3G Capital also initiated a $9.5 million position during the quarter. The only other fund with a new position in the stock is Matthew Tewksbury’s Stevens Capital Management.

How have insiders been trading Pembina Pipeline Corp (NYSE:PBA)?

Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time frame, Pembina Pipeline Corp (NYSE:PBA) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Pembina Pipeline Corp (NYSE:PBA). These stocks are Oneok Partners LP (NYSE:OKS), Magellan Midstream Partners, L.P. (NYSE:MMP), Kinder Morgan Management, LLC (NYSE:KMR), El Paso Pipeline Partners, L.P. (NYSE:EPB), and Enbridge Energy Partners, L.P. (NYSE:EEP). This group of stocks are in the oil & gas pipelines industry and their market caps are closest to PBA’s market cap.

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