Do Hedge Funds Love People’s United Financial, Inc. (PBCT)?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

In this article, we’ll take a closer look at People’s United Financial, Inc. (NASDAQ:PBCT), which registered a decline in popularity among smart money investors in our database during the third quarter. At the end of September, 12 funds held shares of the company. However, 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 Toll Brothers Inc (NYSE:TOL), Tesoro Logistics LP (NYSE:TLLP), and CubeSmart (NYSE:CUBE) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to take a peek at the new action encompassing People’s United Financial, Inc. (NASDAQ:PBCT).

How are hedge funds trading People’s United Financial, Inc. (NASDAQ:PBCT)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, versus 17 funds a quarter earlier. On the other hand, there were a total of nine hedge funds with a bullish position in PBCT at the beginning of this year. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Dmitry Balyasny’s Balyasny Asset Management has the largest position in People’s United Financial, Inc. (NASDAQ:PBCT), worth close to $26 million, amounting to 0.2% of its total 13F portfolio. The second largest stake is held by Cliff Asness’ AQR Capital Management, which disclosed a $21.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish include Solomon Kumin’s Folger Hill Asset Management, Ray Carroll’s Breton Hill Capital, and Paul Tudor Jones’ Tudor Investment Corp. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as People’s United Financial, Inc. (NASDAQ:PBCT) has encountered falling interest from the smart money, logic holds that there lies a certain “tier” of hedgies who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors dumped the biggest investment of all the investors monitored by Insider Monkey, totaling an estimated $6.5 million in stock. Millennium Management, one of the 10 largest hedge funds in the world, also dropped its stock, about $1.4 million worth.

Let’s go over hedge fund activity in other stocks similar to People’s United Financial, Inc. (NASDAQ:PBCT). We will take a look at Toll Brothers Inc (NYSE:TOL), Tesoro Logistics LP (NYSE:TLLP), CubeSmart (NYSE:CUBE), and International Game Technology (NYSE:IGT). All of these stocks’ market caps are similar to PBCT’s market cap.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $309 million. That figure was just $54 million in PBCT’s case. International Game Technology (NYSE:IGT) is the most popular stock in this table. On the other hand Tesoro Logistics LP (NYSE:TLLP) is the least popular one with only six bullish hedge fund positions. People’s United Financial, Inc. (NASDAQ:PBCT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard International Game Technology (NYSE:IGT) might be a better candidate to consider taking a long position in.

Disclosure: none