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Hedge Funds Have Never Been This Bullish On PICO Holdings Inc (PICO)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of PICO Holdings Inc (NASDAQ:PICO) based on that data and determine whether they were really smart about the stock.

PICO Holdings Inc (NASDAQ:PICO) investors should pay attention to an increase in hedge fund interest lately. PICO was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. There were 12 hedge funds in our database with PICO holdings at the end of the previous quarter. Our calculations also showed that PICO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are dozens of indicators stock traders use to appraise stocks. A duo of the most innovative indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top money managers can outpace their index-focused peers by a healthy amount (see the details here).

MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 biggest gold mining companies to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding PICO Holdings Inc (NASDAQ:PICO).

How are hedge funds trading PICO Holdings Inc (NASDAQ:PICO)?

At Q1’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PICO over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

More specifically, Bandera Partners was the largest shareholder of PICO Holdings Inc (NASDAQ:PICO), with a stake worth $8.2 million reported as of the end of September. Trailing Bandera Partners was Royce & Associates, which amassed a stake valued at $6.6 million. Renaissance Technologies, Arrowstreet Capital, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bandera Partners allocated the biggest weight to PICO Holdings Inc (NASDAQ:PICO), around 6.88% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to PICO.

Consequently, some big names have jumped into PICO Holdings Inc (NASDAQ:PICO) headfirst. Engineers Gate Manager, managed by Greg Eisner, created the largest position in PICO Holdings Inc (NASDAQ:PICO). Engineers Gate Manager had $0.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to PICO Holdings Inc (NASDAQ:PICO). We will take a look at Gencor Industries, Inc. (NASDAQ:GENC), Timberland Bancorp, Inc. (NASDAQ:TSBK), Alexco Resource Corp. (NYSE:AXU), and Denison Mines Corp (NYSE:DNN). This group of stocks’ market values are similar to PICO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GENC 4 20616 1
TSBK 3 19601 -2
AXU 4 763 2
DNN 4 2045 0
Average 3.75 10756 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $21 million in PICO’s case. Gencor Industries, Inc. (NASDAQ:GENC) is the most popular stock in this table. On the other hand Timberland Bancorp, Inc. (NASDAQ:TSBK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks PICO Holdings Inc (NASDAQ:PICO) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately PICO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PICO were disappointed as the stock returned 0.5% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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