Is People’s United Financial, Inc. (NASDAQ:PBCT) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is People’s United Financial, Inc. (NASDAQ:PBCT) a splendid investment today? The smart money is getting more bullish. The number of long hedge fund positions increased by 2 in recent months. Our calculations also showed that PBCT isn’t among the 30 most popular stocks among hedge funds. PBCT was in 22 hedge funds’ portfolios at the end of December. There were 20 hedge funds in our database with PBCT positions at the end of the previous quarter.
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’ 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the fresh hedge fund action surrounding People’s United Financial, Inc. (NASDAQ:PBCT).
How have hedgies been trading People’s United Financial, Inc. (NASDAQ:PBCT)?
At Q4’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in PBCT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in People’s United Financial, Inc. (NASDAQ:PBCT), which was worth $42.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $15.5 million worth of shares. Moreover, AQR Capital Management, Two Sigma Advisors, and Gillson Capital were also bullish on People’s United Financial, Inc. (NASDAQ:PBCT), allocating a large percentage of their portfolios to this stock.
Now, key money managers have jumped into People’s United Financial, Inc. (NASDAQ:PBCT) headfirst. Element Capital Management, managed by Jeffrey Talpins, assembled the biggest position in People’s United Financial, Inc. (NASDAQ:PBCT). Element Capital Management had $2.5 million invested in the company at the end of the quarter. John D. Gillespie’s Prospector Partners also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Joel Greenblatt’s Gotham Asset Management, and Bernard Horn’s Polaris Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as People’s United Financial, Inc. (NASDAQ:PBCT) but similarly valued. These stocks are Charles River Laboratories International Inc. (NYSE:CRL), Hubbell Incorporated (NYSE:HUBB), athenahealth, Inc (NASDAQ:ATHN), and Starwood Property Trust, Inc. (NYSE:STWD). This group of stocks’ market values are closest to PBCT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRL | 28 | 699016 | 8 |
| HUBB | 24 | 449250 | -3 |
| ATHN | 26 | 738702 | -1 |
| STWD | 17 | 131281 | -4 |
| Average | 23.75 | 504562 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $505 million. That figure was $118 million in PBCT’s case. Charles River Laboratories International Inc. (NYSE:CRL) is the most popular stock in this table. On the other hand Starwood Property Trust, Inc. (NYSE:STWD) is the least popular one with only 17 bullish hedge fund positions. People’s United Financial, Inc. (NASDAQ:PBCT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that the top 15 most popular stocks among hedge funds returned 21.3% year-to-date through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on PBCT, though not to the same extent, as the stock returned 18.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
