Pembina Pipeline Corp (PBA): Are Hedge Funds Right About This Stock?

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 June 28, so let’s proceed with the discussion of the hedge fund sentiment on Pembina Pipeline Corp (NYSE:PBA).

Pembina Pipeline Corp (NYSE:PBA) investors should be aware of a decrease in enthusiasm from smart money lately. PBA was in 12 hedge funds’ portfolios at the end of June. There were 15 hedge funds in our database with PBA positions at the end of the previous quarter. Our calculations also showed that PBA isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the recent hedge fund action regarding Pembina Pipeline Corp (NYSE:PBA).

Hedge fund activity in Pembina Pipeline Corp (NYSE:PBA)

Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in PBA 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.


Among these funds, Citadel Investment Group held the most valuable stake in Pembina Pipeline Corp (NYSE:PBA), which was worth $75.7 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $19.4 million worth of shares. Moreover, D E Shaw, Perella Weinberg Partners, and Two Sigma Advisors were also bullish on Pembina Pipeline Corp (NYSE:PBA), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Pembina Pipeline Corp (NYSE:PBA) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that slashed their full holdings last quarter. Intriguingly, Israel Englander’s Millennium Management dumped the biggest investment of the 750 funds tracked by Insider Monkey, comprising an estimated $2.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $1.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Pembina Pipeline Corp (NYSE:PBA). We will take a look at Snap Inc. (NYSE:SNAP), IAC/InterActiveCorp (NASDAQ:IAC), Liberty Broadband Corp (NASDAQ:LBRDA), and Amcor plc (NYSE:AMCR). This group of stocks’ market caps are similar to PBA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNAP 45 1580615 14
IAC 47 1728406 -4
LBRDA 20 633003 1
AMCR 12 157102 12
Average 31 1024782 5.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1025 million. That figure was $158 million in PBA’s case. IAC/InterActiveCorp (NASDAQ:IAC) is the most popular stock in this table. On the other hand Amcor plc (NYSE:AMCR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Pembina Pipeline Corp (NYSE:PBA) is even less popular than AMCR. Hedge funds dodged a bullet by taking a bearish stance towards PBA. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PBA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PBA investors were disappointed as the stock returned 1.1% during the third quarter 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 in 2019.

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