At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards PBF Energy Inc (NYSE:PBF).
Is PBF a good stock to buy now? Money managers were in a bearish mood. The number of bullish hedge fund positions dropped by 1 lately. PBF Energy Inc (NYSE:PBF) was in 16 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that PBF 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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. Now we’re going to check out the recent hedge fund action regarding PBF Energy Inc (NYSE:PBF).
Do Hedge Funds Think PBF Is A Good Stock To Buy Now?
At third quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2020. On the other hand, there were a total of 30 hedge funds with a bullish position in PBF a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PBF Energy Inc (NYSE:PBF) was held by D E Shaw, which reported holding $15 million worth of stock at the end of September. It was followed by SIR Capital Management with a $12.7 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and Encompass Capital Advisors. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to PBF Energy Inc (NYSE:PBF), around 3.01% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, dishing out 0.88 percent of its 13F equity portfolio to PBF.
Seeing as PBF Energy Inc (NYSE:PBF) has witnessed falling interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Greg Eisner’s Engineers Gate Manager sold off the largest position of the 750 funds followed by Insider Monkey, worth an estimated $1.3 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund cut about $1 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PBF Energy Inc (NYSE:PBF) but similarly valued. We will take a look at PDF Solutions, Inc. (NASDAQ:PDFS), Brookline Bancorp, Inc. (NASDAQ:BRKL), Oaktree Specialty Lending Corporation (NASDAQ:OCSL), Oxford Industries, Inc. (NYSE:OXM), Tivity Health, Inc. (NASDAQ:TVTY), American Finance Trust, Inc. (NASDAQ:AFIN), and Foundation Building Materials, Inc. (NYSE:FBM). All of these stocks’ market caps match PBF’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 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $69 million in PBF’s case. Tivity Health, Inc. (NASDAQ:TVTY) is the most popular stock in this table. On the other hand Oxford Industries, Inc. (NYSE:OXM) is the least popular one with only 8 bullish hedge fund positions. PBF Energy Inc (NYSE:PBF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PBF is 62.2. 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 PBF as the stock returned 30.4% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.