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Should You Buy PCSB Financial Corporation (PCSB)?

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

PCSB Financial Corporation (NASDAQ:PCSB) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that pcsb isn’t among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are several formulas stock traders use to analyze publicly traded companies. A duo of the most under-the-radar formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the S&P 500 by a significant amount (see the details here).

Chuck Royce

Let’s take a look at the fresh hedge fund action encompassing PCSB Financial Corporation (NASDAQ:PCSB).

What does the smart money think about PCSB Financial Corporation (NASDAQ:PCSB)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PCSB over the last 13 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with PCSB Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Emanuel J. Friedman’s EJF Capital has the number one position in PCSB Financial Corporation (NASDAQ:PCSB), worth close to $10.6 million, amounting to 0.8% of its total 13F portfolio. The second most bullish fund manager is Royce & Associates, managed by Chuck Royce, which holds a $5.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management, Jim Simons’s Renaissance Technologies and John D. Gillespie’s Prospector Partners.

As aggregate interest increased, some big names have been driving this bullishness. Castine Capital Management, managed by Paul Magidson, Jonathan Cohen. And Ostrom Enders, assembled the largest position in PCSB Financial Corporation (NASDAQ:PCSB). Castine Capital Management had $5.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.4 million investment in the stock during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PCSB Financial Corporation (NASDAQ:PCSB) but similarly valued. We will take a look at Cambridge Bancorp (NASDAQ:CATC), Eidos Therapeutics, Inc. (NASDAQ:EIDX), Dynex Capital Inc (NYSE:DX), and Evolution Petroleum Corporation (NYSE:EPM). This group of stocks’ market caps match PCSB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CATC 5 15343 0
EIDX 14 69476 -2
DX 5 9907 -2
EPM 14 28529 3
Average 9.5 30814 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $33 million in PCSB’s case. Eidos Therapeutics, Inc. (NASDAQ:EIDX) is the most popular stock in this table. On the other hand Cambridge Bancorp (NASDAQ:CATC) is the least popular one with only 5 bullish hedge fund positions. PCSB Financial Corporation (NASDAQ:PCSB) 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 EIDX might be a better candidate to consider a long position.

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

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