Is PSTL A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Postal Realty Trust, Inc. (NYSE:PSTL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is PSTL a good stock to buy now? Money managers were in a bullish mood. The number of long hedge fund bets rose by 1 lately. Postal Realty Trust, Inc. (NYSE:PSTL) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that PSTL 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.

Chuck Royce

Chuck Royce of Royce & Associates

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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 let’s view the fresh hedge fund action encompassing Postal Realty Trust, Inc. (NYSE:PSTL).

What have hedge funds been doing with Postal Realty Trust, Inc. (NYSE:PSTL)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in PSTL a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Is PSTL A Good Stock To Buy?

The largest stake in Postal Realty Trust, Inc. (NYSE:PSTL) was held by Waterfront Capital Partners, which reported holding $8.8 million worth of stock at the end of September. It was followed by Royce & Associates with a $7 million position. Other investors bullish on the company included Ancora Advisors, Highland Capital Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Postal Realty Trust, Inc. (NYSE:PSTL), around 1.42% of its 13F portfolio. Highland Capital Management is also relatively very bullish on the stock, setting aside 0.7 percent of its 13F equity portfolio to PSTL.

As aggregate interest increased, key hedge funds were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most valuable position in Postal Realty Trust, Inc. (NYSE:PSTL). Two Sigma Advisors had $0.2 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks similar to Postal Realty Trust, Inc. (NYSE:PSTL). These stocks are GTY Technology Holdings, Inc. (NASDAQ:GTYH), AudioEye, Inc. (NASDAQ:AEYE), Parke Bancorp, Inc. (NASDAQ:PKBK), Golar LNG Partners LP (NASDAQ:GMLP), Servicesource International Inc (NASDAQ:SREV), Lineage Cell Therapeutics, Inc. (NYSE:LCTX), and Educational Development Corporation (NASDAQ:EDUC). This group of stocks’ market valuations are similar to PSTL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GTYH 6 8929 2
AEYE 6 15874 4
PKBK 3 10141 -1
GMLP 7 12797 0
SREV 9 25005 -2
LCTX 8 33137 -4
EDUC 3 5771 2
Average 6 15951 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $27 million in PSTL’s case. Servicesource International Inc (NASDAQ:SREV) is the most popular stock in this table. On the other hand Parke Bancorp, Inc. (NASDAQ:PKBK) is the least popular one with only 3 bullish hedge fund positions. Postal Realty Trust, Inc. (NYSE:PSTL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PSTL 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately PSTL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PSTL were disappointed as the stock returned 6.4% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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