The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards People’s United Financial, Inc. (NASDAQ:PBCT).
Is PBCT a good stock to buy now? Prominent investors were becoming less hopeful. The number of long hedge fund positions shrunk by 2 in recent months. People’s United Financial, Inc. (NASDAQ:PBCT) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that PBCT 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). There were 24 hedge funds in our database with PBCT holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are over 8000 funds in operation today, Our researchers hone in on the bigwigs of this club, around 850 funds. These money managers control the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their highest performing equity investments, Insider Monkey has deciphered numerous investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 we’re going to check out the new hedge fund action encompassing People’s United Financial, Inc. (NASDAQ:PBCT).
Do Hedge Funds Think PBCT Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in PBCT a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of People’s United Financial, Inc. (NASDAQ:PBCT), with a stake worth $82.3 million reported as of the end of September. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $10.5 million. Balyasny Asset Management, Hourglass Capital, and Citadel Investment Group 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 Hourglass Capital allocated the biggest weight to People’s United Financial, Inc. (NASDAQ:PBCT), around 1.21% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to PBCT.
Judging by the fact that People’s United Financial, Inc. (NASDAQ:PBCT) has faced declining sentiment from the smart money, it’s easy to see that there was a specific group of money managers that decided to sell off their entire stakes in the third quarter. Interestingly, Donald Sussman’s Paloma Partners dumped the biggest stake of all the hedgies watched by Insider Monkey, worth an estimated $3.7 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $1.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to People’s United Financial, Inc. (NASDAQ:PBCT). These stocks are Eaton Vance Corp (NYSE:EV), Kemper Corporation (NYSE:KMPR), Vir Biotechnology, Inc. (NASDAQ:VIR), Plains All American Pipeline, L.P. (NASDAQ:PAA), Everbridge, Inc. (NASDAQ:EVBG), Advanced Drainage Systems Inc. (NYSE:WMS), and Mercury Systems Inc (NASDAQ:MRCY). This group of stocks’ market valuations are similar to PBCT’s market valuation.
|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 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $292 million. That figure was $116 million in PBCT’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 6 bullish hedge fund positions. People’s United Financial, Inc. (NASDAQ:PBCT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PBCT is 62.7. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on PBCT as the stock returned 28.3% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.