In this article we will take a look at whether hedge funds think PotlatchDeltic Corporation (NASDAQ:PCH) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in PotlatchDeltic Corporation (NASDAQ:PCH) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as John Wiley & Sons Inc (NYSE:JW), Webster Financial Corporation (NYSE:WBS), and Energizer Holdings, Inc. (NYSE:ENR) to gather more data points. Our calculations also showed that PCH 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 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
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 best imported beer in 2020 to identify emerging trends that are likely to lead to 1000% gains in the coming years. 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. Keeping this in mind let’s check out the new hedge fund action regarding PotlatchDeltic Corporation (NASDAQ:PCH).
What does smart money think about PotlatchDeltic Corporation (NASDAQ:PCH)?
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards PCH over the last 18 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in PotlatchDeltic Corporation (NASDAQ:PCH) was held by Southeastern Asset Management, which reported holding $124.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $79.8 million position. Other investors bullish on the company included Ancora Advisors, Fisher Asset Management, and Intrepid Capital Management. In terms of the portfolio weights assigned to each position Southeastern Asset Management allocated the biggest weight to PotlatchDeltic Corporation (NASDAQ:PCH), around 2.96% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, setting aside 2.44 percent of its 13F equity portfolio to PCH.
Judging by the fact that PotlatchDeltic Corporation (NASDAQ:PCH) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of hedgies that slashed their entire stakes in the first quarter. Interestingly, Israel Englander’s Millennium Management dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, valued at about $9.8 million in stock. Richard Driehaus’s fund, Driehaus Capital, also dropped its stock, about $5.5 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PotlatchDeltic Corporation (NASDAQ:PCH) but similarly valued. We will take a look at John Wiley & Sons Inc (NYSE:JW), Webster Financial Corporation (NYSE:WBS), Energizer Holdings, Inc. (NYSE:ENR), and EnerSys (NYSE:ENS). This group of stocks’ market caps resemble PCH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $235 million in PCH’s case. Webster Financial Corporation (NYSE:WBS) is the most popular stock in this table. On the other hand EnerSys (NYSE:ENS) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks PotlatchDeltic Corporation (NASDAQ:PCH) is even less popular than ENS. Hedge funds dodged a bullet by taking a bearish stance towards PCH. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market by 16.8 percentage points. Unfortunately PCH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); PCH investors were disappointed as the stock returned 19.6% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.