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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Pivotal Investment Corporation II (NYSE:PIC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Pivotal Investment Corporation II (NYSE:PIC) investors should pay attention to an increase in hedge fund sentiment recently. Pivotal Investment Corporation II (NYSE:PIC) was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 15. There were 12 hedge funds in our database with PIC holdings at the end of June. Our calculations also showed that PIC isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a gander at the latest hedge fund action surrounding Pivotal Investment Corporation II (NYSE:PIC).
Do Hedge Funds Think PIC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in PIC a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Ursa Fund Management held the most valuable stake in Pivotal Investment Corporation II (NYSE:PIC), which was worth $25.9 million at the end of the third quarter. On the second spot was Magnetar Capital which amassed $14.9 million worth of shares. Candlestick Capital Management, HBK Investments, and Omni Partners 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 Ursa Fund Management allocated the biggest weight to Pivotal Investment Corporation II (NYSE:PIC), around 13.46% of its 13F portfolio. Ursa Fund Management is also relatively very bullish on the stock, dishing out 1.49 percent of its 13F equity portfolio to PIC.
As one would reasonably expect, key hedge funds were breaking ground themselves. Ursa Fund Management, managed by Andrew Hahn, established the most valuable position in Pivotal Investment Corporation II (NYSE:PIC). Ursa Fund Management had $25.9 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also initiated a $5.8 million position during the quarter. The other funds with brand new PIC positions are Andrew Hahn’s Ursa Fund Management, D. E. Shaw’s D E Shaw, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pivotal Investment Corporation II (NYSE:PIC) but similarly valued. We will take a look at Legacy Housing Corporation (NASDAQ:LEGH), Gladstone Land Corporation (NASDAQ:LAND), MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT), Blue Bird Corporation (NASDAQ:BLBD), Amalgamated Bank (NASDAQ:AMAL), Magenta Therapeutics, Inc. (NASDAQ:MGTA), and Ituran Location and Control Ltd. (NASDAQ:ITRN). This group of stocks’ market values resemble PIC’s market value.
|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 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $69 million in PIC’s case. MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) is the most popular stock in this table. On the other hand Legacy Housing Corporation (NASDAQ:LEGH) is the least popular one with only 7 bullish hedge fund positions. Pivotal Investment Corporation II (NYSE:PIC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PIC is 62. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on PIC as the stock returned 36.3% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.