PNC Financial Services (NYSE:PNC) is an interesting play on the financial industry because of its diversity. Apparently hedge funds think so too.
Now, according to many investors, hedge funds are assumed to be useless, outdated financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation today, this site looks at the crème de la crème of this club, around 525 funds. It is assumed that this group controls the majority of all hedge funds’ total assets, and by watching their highest quality investments, we’ve identified a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as crucial, bullish insider trading activity is a second way to look at the stock market universe. As the old adage goes: there are plenty of motivations for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this strategy if “monkeys” understand where to look (learn more here).
Furthermore, let’s examine the recent info about PNC Financial Services (NYSE:PNC).
How are hedge funds trading PNC Financial Services (NYSE:PNC)?
Heading into Q3, a total of 37 of the hedge funds we track held long positions in this stock, a change of 19% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully.
When using filings from the hedgies we track, Richard S. Pzena’s Pzena Investment Management had the most valuable position in PNC Financial Services (NYSE:PNC), worth close to $260.2 million, accounting for 1.7% of its total 13F portfolio. On Pzena Investment Management’s heels is Ric Dillon of Diamond Hill Capital, with a $163.2 million position; 1.8% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Mario Gabelli’s GAMCO Investors and Phill Gross and Robert Atchinson’s Adage Capital Management.
As aggregate interest spiked, particular hedge funds were leading the bulls’ herd. Pzena Investment Management, managed by Richard S. Pzena, created the most valuable position in PNC Financial Services (NYSE:PNC). Pzena Investment Management had 260.2 million invested in the company at the end of the quarter. Ric Dillon’s Diamond Hill Capital also made a $163.2 million investment in the stock during the quarter. The following funds were also among the new PNC investors: Ken Griffin’s Citadel Investment Group, Mario Gabelli’s GAMCO Investors, and Phill Gross and Robert Atchinson’s Adage Capital Management.
What have insiders been doing with PNC Financial Services (NYSE:PNC)?
Insider buying is most useful when the company in question has experienced transactions within the past six months. Over the latest 180-day time frame, PNC Financial Services (NYSE:PNC) has experienced zero unique insiders purchasing, and 16 insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to PNC Financial Services (NYSE:PNC). These stocks are SunTrust Banks, Inc. (NYSE:STI), Toronto-Dominion Bank (USA) (NYSE:TD), The Bank of Nova Scotia (USA) (NYSE:BNS), Bank of Montreal (USA) (NYSE:BMO), and Canadian Imperial Bank of Commerce (USA) (NYSE:CM). This group of stocks belong to the money center banks industry and their market caps are similar to PNC’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|SunTrust Banks, Inc. (NYSE:STI)||32||0||6|
|Toronto-Dominion Bank (USA) (NYSE:TD)||11||0||0|
|The Bank of Nova Scotia (USA) (NYSE:BNS)||9||0||0|
|Bank of Montreal (USA) (NYSE:BMO)||11||0||0|
|Canadian Imperial Bank of Commerce (USA) (NYSE:CM)||8||0||0|
Using the returns explained by the previously mentioned strategies, regular investors should always pay attention to hedge fund and insider trading sentiment, and PNC Financial Services (NYSE:PNC) applies perfectly to this mantra.