Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Pennsylvania R.E.I.T. (NYSE:PEI).
Pennsylvania R.E.I.T. (NYSE:PEI) has seen a decrease in hedge fund sentiment of late. PEI was in 9 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with PEI positions at the end of the previous quarter. At the end of this article we will also compare PEI to other stocks including WD-40 Company (NASDAQ:WDFC), Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), and Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What have hedge funds been doing with Pennsylvania R.E.I.T. (NYSE:PEI)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PEI over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Pennsylvania R.E.I.T. (NYSE:PEI). Renaissance Technologies has a $31.7 million position in the stock. Coming in second is Cliff Asness of AQR Capital Management, with a $3.8 million position. Remaining professional money managers with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Matthew Tewksbury’s Stevens Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually got rid of their positions entirely. Interestingly, Dmitry Balyasny’s Balyasny Asset Management got rid of the largest investment of all the hedgies followed by Insider Monkey, totaling close to $5.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $4.6 million worth.
Let’s check out hedge fund activity in other stocks similar to Pennsylvania R.E.I.T. (NYSE:PEI). These stocks are WD-40 Company (NASDAQ:WDFC), Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV), and Amedisys Inc (NASDAQ:AMED). This group of stocks’ market caps resemble PEI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $43 million in PEI’s case. Amedisys Inc (NASDAQ:AMED) is the most popular stock in this table. On the other hand Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) is the least popular one with only 3 bullish hedge fund positions. Pennsylvania R.E.I.T. (NYSE:PEI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AMED might be a better candidate to consider taking a long position in.