The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Pembina Pipeline Corp (NYSE:PBA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is PBA a good stock to buy now? Hedge funds were becoming hopeful. The number of bullish hedge fund bets moved up by 2 in recent months. Pembina Pipeline Corp (NYSE:PBA) was in 12 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. Our calculations also showed that PBA isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a gander at the key hedge fund action surrounding Pembina Pipeline Corp (NYSE:PBA).
Do Hedge Funds Think PBA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PBA over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Pembina Pipeline Corp (NYSE:PBA), which was worth $14.6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $12.9 million worth of shares. Holocene Advisors, Millennium Management, and Heronetta Management 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 Heronetta Management allocated the biggest weight to Pembina Pipeline Corp (NYSE:PBA), around 4.4% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to PBA.
As aggregate interest increased, some big names have jumped into Pembina Pipeline Corp (NYSE:PBA) headfirst. D E Shaw, managed by D. E. Shaw, initiated the most outsized position in Pembina Pipeline Corp (NYSE:PBA). D E Shaw had $12.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $12.5 million position during the quarter. The other funds with new positions in the stock are Stuart J. Zimmer’s Zimmer Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Donald Sussman’s Paloma Partners.
Let’s go over hedge fund activity in other stocks similar to Pembina Pipeline Corp (NYSE:PBA). We will take a look at Cheniere Energy, Inc. (NYSE:LNG), KeyCorp (NYSE:KEY), United Microelectronics Corp (NYSE:UMC), ONEOK, Inc. (NYSE:OKE), Dr. Reddy’s Laboratories Limited (NYSE:RDY), Dynatrace, Inc. (NYSE:DT), and Evergy, Inc. (NYSE:EVRG). This group of stocks’ market caps match PBA’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 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $727 million. That figure was $56 million in PBA’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 11 bullish hedge fund positions. Pembina Pipeline Corp (NYSE:PBA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PBA is 29.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on PBA as the stock returned 27.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.