Where Do Hedge Funds Stand On Premier Financial Bancorp, Inc. (PFBI)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Premier Financial Bancorp, Inc. (NASDAQ:PFBI).

Premier Financial Bancorp, Inc. (NASDAQ:PFBI) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 6. PFBI investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 2 hedge funds in our database with PFBI positions at the end of the second quarter. Our calculations also showed that PFBI 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.

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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.

Jeffrey Gendell of Tontine Asset Management

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 10 most profitable companies in the world 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. Now let’s review the key hedge fund action surrounding Premier Financial Bancorp, Inc. (NASDAQ:PFBI).

What does smart money think about Premier Financial Bancorp, Inc. (NASDAQ:PFBI)?

At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PFBI over the last 21 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the number one position in Premier Financial Bancorp, Inc. (NASDAQ:PFBI), worth close to $2 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Tontine Asset Management, led by Jeffrey Gendell, holding a $0.8 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Roger Ibbotson’s Zebra Capital Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Premier Financial Bancorp, Inc. (NASDAQ:PFBI), around 0.5% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, designating 0.16 percent of its 13F equity portfolio to PFBI.

Consequently, key money managers were breaking ground themselves. Zebra Capital Management, managed by Roger Ibbotson, assembled the most valuable position in Premier Financial Bancorp, Inc. (NASDAQ:PFBI). Zebra Capital Management had $0.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.1 million investment in the stock during the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Premier Financial Bancorp, Inc. (NASDAQ:PFBI). We will take a look at CTI Biopharma Corp. (NASDAQ:CTIC), Montage Resources Corp (NYSE:MR), Lakeland Industries, Inc. (NASDAQ:LAKE), InnerWorkings, Inc. (NASDAQ:INWK), Consolidated Water Co. Ltd. (NASDAQ:CWCO), First Choice Bancorp (NASDAQ:FCBP), and CRH Medical Corporation (NYSE:CRHM). All of these stocks’ market caps match PFBI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CTIC 6 48701 -3
MR 14 15153 3
LAKE 12 29681 -2
INWK 14 14937 1
CWCO 8 12141 -1
FCBP 2 479 1
CRHM 6 20423 -1
Average 8.9 20216 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $3 million in PFBI’s case. Montage Resources Corp (NYSE:MR) is the most popular stock in this table. On the other hand First Choice Bancorp (NASDAQ:FCBP) is the least popular one with only 2 bullish hedge fund positions. Premier Financial Bancorp, Inc. (NASDAQ:PFBI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PFBI is 35.3. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on PFBI as the stock returned 31.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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