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Hedge Funds Keep Buying Peapack-Gladstone Financial Corp (PGC)

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 Peapack-Gladstone Financial Corp (NASDAQ:PGC) based on that data.

Peapack-Gladstone Financial Corp (NASDAQ:PGC) investors should be aware of an increase in support from the world’s most elite money managers recently. Our calculations also showed that PGC 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Michael Price MFP Investors

Michael Price of MFP Investors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the recent hedge fund action regarding Peapack-Gladstone Financial Corp (NASDAQ:PGC).

What does smart money think about Peapack-Gladstone Financial Corp (NASDAQ:PGC)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in PGC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the most valuable position in Peapack-Gladstone Financial Corp (NASDAQ:PGC), worth close to $9.3 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, holding a $7.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism contain Michael Price’s MFP Investors, Emanuel J. Friedman’s EJF Capital and Matthew Lindenbaum’s Basswood Capital. In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to Peapack-Gladstone Financial Corp (NASDAQ:PGC), around 2.76% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, earmarking 1.39 percent of its 13F equity portfolio to PGC.

As one would reasonably expect, some big names were leading the bulls’ herd. Engineers Gate Manager, managed by Greg Eisner, created the most valuable position in Peapack-Gladstone Financial Corp (NASDAQ:PGC). Engineers Gate Manager had $0.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.3 million position during the quarter.

Let’s check out hedge fund activity in other stocks similar to Peapack-Gladstone Financial Corp (NASDAQ:PGC). We will take a look at Organogenesis Holdings Inc. (NASDAQ:ORGO), NGL Energy Partners LP (NYSE:NGL), Select Energy Services, Inc. (NYSE:WTTR), and KNOT Offshore Partners LP (NYSE:KNOP). All of these stocks’ market caps resemble PGC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ORGO 5 2903 -3
NGL 4 3343 0
WTTR 16 18497 0
KNOP 6 20344 1
Average 7.75 11272 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $36 million in PGC’s case. Select Energy Services, Inc. (NYSE:WTTR) is the most popular stock in this table. On the other hand NGL Energy Partners LP (NYSE:NGL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Peapack-Gladstone Financial Corp (NASDAQ:PGC) 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately PGC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PGC were disappointed as the stock returned 4.2% during the second quarter (through June 22nd) 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.