Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Peoples Bancorp Inc. (NASDAQ:PEBO) changed recently.
Is Peoples Bancorp Inc. (NASDAQ:PEBO) a buy, sell, or hold? The best stock pickers are taking a bearish view. The number of long hedge fund positions went down by 2 recently. Our calculations also showed that PEBO isn’t among the 30 most popular stocks among hedge funds (see the video below). PEBO was in 7 hedge funds’ portfolios at the end of the second quarter of 2019. There were 9 hedge funds in our database with PEBO holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the latest hedge fund action surrounding Peoples Bancorp Inc. (NASDAQ:PEBO).
How are hedge funds trading Peoples Bancorp Inc. (NASDAQ:PEBO)?
Heading into the third quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in PEBO 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.
The largest stake in Peoples Bancorp Inc. (NASDAQ:PEBO) was held by Renaissance Technologies, which reported holding $16.7 million worth of stock at the end of March. It was followed by Elizabeth Park Capital Management with a $6.8 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and D E Shaw.
Due to the fact that Peoples Bancorp Inc. (NASDAQ:PEBO) has faced bearish sentiment from the smart money, we can see that there exists a select few hedgies that decided to sell off their positions entirely heading into Q3. It’s worth mentioning that Peter Muller’s PDT Partners said goodbye to the largest position of all the hedgies tracked by Insider Monkey, valued at close to $0.3 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.3 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds heading into Q3.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Peoples Bancorp Inc. (NASDAQ:PEBO) but similarly valued. These stocks are Preferred Apartment Communities Inc. (NYSE:APTS), National Presto Industries Inc. (NYSE:NPK), Ready Capital Corporation (NYSE:RC), and Uxin Limited (NASDAQ:UXIN). All of these stocks’ market caps are closest to PEBO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $27 million in PEBO’s case. National Presto Industries Inc. (NYSE:NPK) is the most popular stock in this table. On the other hand Uxin Limited (NASDAQ:UXIN) is the least popular one with only 3 bullish hedge fund positions. Peoples Bancorp Inc. (NASDAQ:PEBO) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PEBO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PEBO investors were disappointed as the stock returned -0.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.