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Should You Avoid PNC Financial Services Group (PNC)?

Is PNC Financial Services Group (NYSE:PNC) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

PNC Financial Services Group (NYSE:PNC) has seen a decrease in activity from the world’s largest hedge funds of late. At the end of this article, we will also compare PNC Financial Services Group (NYSE:PNC) to other stocks, including Canadian National Railway (USA) (NYSE:CNI), General Dynamics Corporation (NYSE:GD), and NextEra Energy, Inc. (NYSE:NEE) to get a better sense of its popularity.

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Today, there are a lot of gauges market participants employ to value their stock investments. Some of the best gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a solid amount (see the details here).

Now, we’re going to take a peek at the latest action regarding PNC Financial Services Group (NYSE:PNC).

Hedge fund activity in PNC Financial Services Group (NYSE:PNC)

At the end of Q3, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 8% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in PNC Financial Services (NYSE:PNC). AQR Capital Management has a $342.3 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Pzena Investment Management, managed by Richard S. Pzena, which holds a $253.6 million position; 1.6% of its 13F portfolio is allocated to the company. Some other peers with similar optimism consist of Mario Gabelli’s GAMCO Investors, Phill Gross and Robert Atchinson’s Adage Capital Management, and Martin Whitman’s Third Avenue Management.

Seeing as PNC Financial Services Group (NYSE:PNC) has witnessed a falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Stanley Druckenmiller’s Duquesne Capital dropped the largest investment of all the hedgies watched by Insider Monkey, totaling an estimated $19.6 million in stock, and Eric Halet and Davide Serra’s Algebris Investments was right behind this move, as the fund sold off about $3.2 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PNC Financial Services Group (NYSE:PNC) but similarly valued. These stocks are Canadian National Railway (USA) (NYSE:CNI), General Dynamics Corporation (NYSE:GD), NextEra Energy, Inc. (NYSE:NEE), and Infosys Ltd ADR (NYSE:INFY). This group of stocks’ market valuations is similar to PNC Financial Services Group (NYSE:PNC)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CNI 17 1296655 -4
GD 43 6049744 3
NEE 43 1811341 5
INFY 19 892333 2

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 $2.51 billion. That figure was $1.30 billion in PNC Financial Services Group (NYSE:PNC)’s case. General Dynamics Corporation (NYSE:GD) is the most popular stock in this table. On the other hand, Canadian National Railway (USA) (NYSE:CNI) is the least popular one with only 17 bullish hedge fund positions. PNC Financial Services  Group (NYSE:PNC) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, General Dynamics Corporation (NYSE:GD) might be a better candidate to consider a long position.

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