In this article we will check out the progression of hedge fund sentiment towards Piedmont Office Realty Trust, Inc. (NYSE:PDM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is PDM a good stock to buy now? Piedmont Office Realty Trust, Inc. (NYSE:PDM) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 15. PDM investors should pay attention to an increase in hedge fund sentiment lately. There were 11 hedge funds in our database with PDM positions at the end of the second quarter. Our calculations also showed that PDM 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 take a gander at the fresh hedge fund action regarding Piedmont Office Realty Trust, Inc. (NYSE:PDM).
Do Hedge Funds Think PDM Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PDM over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Millennium Management was the largest shareholder of Piedmont Office Realty Trust, Inc. (NYSE:PDM), with a stake worth $10.1 million reported as of the end of September. Trailing Millennium Management was GLG Partners, which amassed a stake valued at $9.6 million. Balyasny Asset Management, ExodusPoint Capital, and Renaissance Technologies 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 Tudor Investment Corp allocated the biggest weight to Piedmont Office Realty Trust, Inc. (NYSE:PDM), around 0.08% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to PDM.
Now, key hedge funds were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Piedmont Office Realty Trust, Inc. (NYSE:PDM). Balyasny Asset Management had $9.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Bruce Kovner’s Caxton Associates LP and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Piedmont Office Realty Trust, Inc. (NYSE:PDM) but similarly valued. We will take a look at Columbia Banking System Inc (NASDAQ:COLB), Oi SA (NYSE:OIBR), CareTrust REIT Inc (NASDAQ:CTRE), NanoString Technologies Inc (NASDAQ:NSTG), Turquoise Hill Resources Ltd (NYSE:TRQ), Range Resources Corp. (NYSE:RRC), and Genworth Financial Inc (NYSE:GNW). This group of stocks’ market valuations resemble PDM’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 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $46 million in PDM’s case. Genworth Financial Inc (NYSE:GNW) is the most popular stock in this table. On the other hand Oi SA (NYSE:OIBR) is the least popular one with only 6 bullish hedge fund positions. Piedmont Office Realty Trust, Inc. (NYSE:PDM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PDM is 48.5. 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 PDM as the stock returned 20.9% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.