Do Hedge Funds Love Pinnacle Financial Partners (PNFP)?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Pinnacle Financial Partners (NASDAQ:PNFP).

Is Pinnacle Financial Partners (NASDAQ:PNFP) a sound investment today? The smart money is taking a bearish view. The number of bullish hedge fund positions dropped by 2 lately. Pinnacle Financial Partners (NASDAQ:PNFP) was in 8 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with Pinnacle Financial Partners (NASDAQ:PNFP) holdings at the end of the previous quarter. Some investors may not be surprised with the hedge fund sentiment, as the trading performance of the company followed a similar pattern, with its shares dropping 9.12% throughout the quarter.

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 Silicon Laboratories (NASDAQ:SLAB), CVB Financial Corp. (NASDAQ:CVBF), and Selective Insurance Group (NASDAQ:SIGI) to gather more data points.

In the 21st century investor’s toolkit, there are a multitude of methods shareholders can use to grade their holdings. A duo of the most useful methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a significant margin (see the details here).

Keeping this in mind, we’re going to review the key action encompassing Pinnacle Financial Partners (NASDAQ:PNFP).

How are hedge funds trading Pinnacle Financial Partners (NASDAQ:PNFP)?

At the end of Q3, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 20% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the biggest position in Pinnacle Financial Partners (NASDAQ:PNFP). Renaissance Technologies has a $25.2 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Forest Hill Capital, managed by Mark Lee, which holds a $16.4 million position; 1.6% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism include Israel Englander’s Millennium Management, Cliff Asness’ AQR Capital Management, and Bernard Horn’s Polaris Capital Management.

Because Pinnacle Financial Partners (NASDAQ:PNFP) has experienced a bearish sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers who were dropping their full holdings heading into Q4. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest investment of the 700 funds tracked by Insider Monkey, totaling about $0.9 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also cut its stock, about $0.8 million worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Pinnacle Financial Partners (NASDAQ:PNFP). These stocks are Silicon Laboratories (NASDAQ:SLAB), CVB Financial Corp. (NASDAQ:CVBF), Selective Insurance Group (NASDAQ:SIGI), and Matador Resources Co (NYSE:MTDR). This group of stocks’ market values are similar to Pinnacle Financial Partners (NASDAQ:PNFP)’s market value.

As you can see, these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $53 million in Pinnacle Financial Partners (NASDAQ:PNFP)’s case. Selective Insurance Group (NASDAQ:SIGI) is the most popular stock in this table. On the other hand, CVB Financial Corp. (NASDAQ:CVBF) is the least popular one with only 5 bullish hedge fund positions. Pinnacle Financial Partners (NASDAQ:PNFP) 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, Selective Insurance Group (NASDAQ:SIGI) might be a better candidate to consider a long position.