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Pzena Investment Management Inc (PZN): Hedge Funds In Wait-and-See Mode

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 Pzena Investment Management Inc (NYSE:PZN).

Pzena Investment Management Inc (NYSE:PZN) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of March. 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 Teekay Corporation (NYSE:TK), Netfin Acquisition Corp. (NASDAQ:NFIN), and America First Multifamily Investors, L.P. (NASDAQ:ATAX) to gather more data points. Our calculations also showed that PZN 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 tons of methods stock market investors use to value stocks. Some of the most under-the-radar methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top money managers can beat their index-focused peers by a superb margin (see the details here).

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the key hedge fund action surrounding Pzena Investment Management Inc (NYSE:PZN).

What does smart money think about Pzena Investment Management Inc (NYSE:PZN)?

At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in PZN a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the largest position in Pzena Investment Management Inc (NYSE:PZN). Renaissance Technologies has a $4.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $1.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Pzena Investment Management Inc (NYSE:PZN), around 0.09% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to PZN.

Since Pzena Investment Management Inc (NYSE:PZN) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that elected to cut their positions entirely by the end of the first quarter. At the top of the heap, Israel Englander’s Millennium Management cut the largest position of the 750 funds tracked by Insider Monkey, valued at about $0.2 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund said goodbye to about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Pzena Investment Management Inc (NYSE:PZN). These stocks are Teekay Corporation (NYSE:TK), Netfin Acquisition Corp. (NASDAQ:NFIN), America First Multifamily Investors, L.P. (NASDAQ:ATAX), and FuelCell Energy, Inc. (NASDAQ:FCEL). This group of stocks’ market valuations are similar to PZN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TK 13 16997 -1
NFIN 12 56443 0
ATAX 1 240 -1
FCEL 6 3006 4
Average 8 19172 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $7 million in PZN’s case. Teekay Corporation (NYSE:TK) is the most popular stock in this table. On the other hand America First Multifamily Investors, L.P. (NASDAQ:ATAX) is the least popular one with only 1 bullish hedge fund positions. Pzena Investment Management Inc (NYSE:PZN) 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on PZN, though not to the same extent, as the stock returned 24.3% during the second quarter and outperformed the market.

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