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Pembina Pipeline Corp (PBA): Hedge Funds Taking Some Chips Off The Table

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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Pembina Pipeline Corp (NYSE:PBA).

Is Pembina Pipeline Corp (NYSE:PBA) a buy, sell, or hold? Prominent investors are turning less bullish. The number of long hedge fund positions fell by 2 in recent months. Our calculations also showed that PBA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 today’s marketplace there are a lot of metrics market participants put to use to value their stock investments. Two of the most under-the-radar metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top investment managers can beat their index-focused peers by a significant amount (see the details here).

Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, We take a look at lists like the 10 stocks that went up during the 2008 crash to identify the companies that are likely to deliver double digit returns in up and down markets. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the new hedge fund action surrounding Pembina Pipeline Corp (NYSE:PBA).

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

Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from one quarter earlier. By comparison, 15 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.

More specifically, Citadel Investment Group was the largest shareholder of Pembina Pipeline Corp (NYSE:PBA), with a stake worth $22.2 million reported as of the end of September. Trailing Citadel Investment Group was Zimmer Partners, which amassed a stake valued at $9.7 million. Two Sigma Advisors, Heronetta Management, 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 Heronetta Management allocated the biggest weight to Pembina Pipeline Corp (NYSE:PBA), around 4.76% of its 13F portfolio. Lucas Capital Management is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to PBA.

Because Pembina Pipeline Corp (NYSE:PBA) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds who were dropping their positions entirely last quarter. Intriguingly, D. E. Shaw’s D E Shaw cut the biggest position of the 750 funds watched by Insider Monkey, comprising about $15.6 million in stock. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also dropped its stock, about $1.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Pembina Pipeline Corp (NYSE:PBA). We will take a look at Icahn Enterprises LP (NASDAQ:IEP), Ingersoll Rand Inc. (NYSE:IR), CenturyLink, Inc. (NYSE:CTL), and Brown & Brown, Inc. (NYSE:BRO). All of these stocks’ market caps match PBA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IEP 3 9602364 -1
IR 33 490015 -14
CTL 34 774832 0
BRO 26 585823 3
Average 24 2863259 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $2863 million. That figure was $52 million in PBA’s case. CenturyLink, Inc. (NYSE:CTL) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 3 bullish hedge fund positions. Pembina Pipeline Corp (NYSE:PBA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on PBA as the stock returned 34.3% during the second quarter and outperformed the market by an even larger margin.

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