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Hedge Funds Are Betting On Pennsylvania Real Estate Investment Trust (PEI)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Pennsylvania Real Estate Investment Trust (NYSE:PEI).

Pennsylvania Real Estate Investment Trust (NYSE:PEI) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that PEI isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

We’re going to view the recent hedge fund action regarding Pennsylvania Real Estate Investment Trust (NYSE:PEI).

What have hedge funds been doing with Pennsylvania Real Estate Investment Trust (NYSE:PEI)?

Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PEI over the last 13 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

No of Hedge Funds with PEI Positions

When looking at the institutional investors followed by Insider Monkey, AEW Capital Management, managed by Jeffrey Furber, holds the most valuable position in Pennsylvania Real Estate Investment Trust (NYSE:PEI). AEW Capital Management has a $33 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Brian J. Higgins of King Street Capital, with a $9.5 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Dmitry Balyasny’s Balyasny Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Pennsylvania Real Estate Investment Trust (NYSE:PEI) headfirst. Millennium Management, managed by Israel Englander, assembled the biggest position in Pennsylvania Real Estate Investment Trust (NYSE:PEI). Millennium Management had $1.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks similar to Pennsylvania Real Estate Investment Trust (NYSE:PEI). We will take a look at QuinStreet Inc (NASDAQ:QNST), U.S. Xpress Enterprises, Inc. (NYSE:USX), Blue Bird Corporation (NASDAQ:BLBD), and Pzena Investment Management Inc (NYSE:PZN). This group of stocks’ market caps are closest to PEI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QNST 28 187309 7
USX 13 101046 -5
BLBD 18 181715 -2
PZN 4 12890 -1
Average 15.75 120740 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $59 million in PEI’s case. QuinStreet Inc (NASDAQ:QNST) is the most popular stock in this table. On the other hand Pzena Investment Management Inc (NYSE:PZN) is the least popular one with only 4 bullish hedge fund positions. Pennsylvania Real Estate Investment Trust (NYSE:PEI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QNST might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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