Is PGRE A Good Stock To Buy Now?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Paramount Group Inc (NYSE:PGRE).

Is PGRE a good stock to buy now? Paramount Group Inc (NYSE:PGRE) shareholders have witnessed a decrease in enthusiasm from smart money recently. Paramount Group Inc (NYSE:PGRE) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that PGRE 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.


Joel Greenblatt of Gotham Asset Management

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 look at the new hedge fund action regarding Paramount Group Inc (NYSE:PGRE).

Do Hedge Funds Think PGRE Is A Good Stock To Buy Now?

At third quarter’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PGRE over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Long Pond Capital was the largest shareholder of Paramount Group Inc (NYSE:PGRE), with a stake worth $69.7 million reported as of the end of September. Trailing Long Pond Capital was Citadel Investment Group, which amassed a stake valued at $13.9 million. Arrowstreet Capital, Renaissance Technologies, and Millennium 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 Long Pond Capital allocated the biggest weight to Paramount Group Inc (NYSE:PGRE), around 2.67% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.25 percent of its 13F equity portfolio to PGRE.

Seeing as Paramount Group Inc (NYSE:PGRE) has witnessed falling interest from hedge fund managers, logic holds that there were a few funds that decided to sell off their positions entirely last quarter. Intriguingly, Jeffrey Altman’s Owl Creek Asset Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $10.4 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $4.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Paramount Group Inc (NYSE:PGRE). These stocks are Boise Cascade Co (NYSE:BCC), Liberty Latin America Ltd. (NASDAQ:LILAK), Verra Mobility Corporation (NASDAQ:VRRM), Cardiovascular Systems Inc (NASDAQ:CSII), BioTelemetry, Inc. (NASDAQ:BEAT), Rambus Inc. (NASDAQ:RMBS), and Innospec Inc. (NASDAQ:IOSP). This group of stocks’ market values resemble PGRE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BCC 25 65613 12
LILAK 28 313011 1
VRRM 19 220734 -6
CSII 22 155492 2
BEAT 17 88893 1
RMBS 19 167579 1
IOSP 21 74483 3
Average 21.6 155115 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $155 million. That figure was $126 million in PGRE’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand BioTelemetry, Inc. (NASDAQ:BEAT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Paramount Group Inc (NYSE:PGRE) is even less popular than BEAT. Our overall hedge fund sentiment score for PGRE is 24.2. 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. Hedge funds clearly dropped the ball on PGRE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on PGRE as the stock returned 29.8% since Q3 (through December 14th) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.