Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Pitney Bowes Inc. (NYSE:PBI) was in 22 hedge funds’ portfolios at the end of September. PBI shareholders have witnessed an increase in support from the world’s most elite money managers lately. There were 20 hedge funds in our database with PBI positions at the end of the previous quarter. Our calculations also showed that PBI isn’t among the 30 most popular stocks among hedge funds.
Today there are dozens of indicators stock traders have at their disposal to grade stocks. A duo of the most useful indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outpace the broader indices by a solid amount (see the details here).
Let’s take a glance at the key hedge fund action regarding Pitney Bowes Inc. (NYSE:PBI).
How have hedgies been trading Pitney Bowes Inc. (NYSE:PBI)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PBI over the last 13 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Pitney Bowes Inc. (NYSE:PBI), which was worth $35 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $25.2 million worth of shares. Moreover, GLG Partners, Millennium Management, and Citadel Investment Group were also bullish on Pitney Bowes Inc. (NYSE:PBI), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Pitney Bowes Inc. (NYSE:PBI) headfirst. Millennium Management, managed by Israel Englander, initiated the most valuable position in Pitney Bowes Inc. (NYSE:PBI). Millennium Management had $11.6 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $1.2 million position during the quarter. The other funds with brand new PBI positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks similar to Pitney Bowes Inc. (NYSE:PBI). We will take a look at Teekay LNG Partners L.P. (NYSE:TGP), TPG Specialty Lending Inc (NYSE:TSLX), Blackrock Corporate High Yield Fund Inc (NYSE:HYT), and Hudbay Minerals Inc. (NYSE:HBM). This group of stocks’ market caps resemble PBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TGP | 5 | 22533 | -2 |
| TSLX | 10 | 45875 | 1 |
| HYT | 2 | 20224 | -2 |
| HBM | 13 | 197863 | 1 |
| Average | 7.5 | 71624 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $132 million in PBI’s case. Hudbay Minerals Inc. (NYSE:HBM) is the most popular stock in this table. On the other hand Blackrock Corporate High Yield Fund Inc (NYSE:HYT) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Pitney Bowes Inc. (NYSE:PBI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
