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.
Pembina Pipeline Corp (NYSE:PBA) has seen an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that PBA isn’t among the 30 most popular stocks among hedge funds.
In today’s marketplace there are a multitude of formulas stock market investors can use to analyze publicly traded companies. Two of the most underrated formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best fund managers can outclass the S&P 500 by a very impressive margin (see the details here).
We’re going to analyze the latest hedge fund action surrounding Pembina Pipeline Corp (NYSE:PBA).
What does the smart money think about Pembina Pipeline Corp (NYSE:PBA)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PBA over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the largest position in Pembina Pipeline Corp (NYSE:PBA), worth close to $54.2 million, amounting to less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Perella Weinberg Partners, managed by Daniel Arbess, which holds a $22.7 million position; 1% of its 13F portfolio is allocated to the company. Some other peers that are bullish encompass Vince Maddi and Shawn Brennan’s SIR Capital Management, Steve Cohen’s Point72 Asset Management and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, some big names have jumped into Pembina Pipeline Corp (NYSE:PBA) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most valuable position in Pembina Pipeline Corp (NYSE:PBA). Two Sigma Advisors had $5.3 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and D. E. Shaw’s D E Shaw.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pembina Pipeline Corp (NYSE:PBA) but similarly valued. These stocks are Western Digital Corporation (NASDAQ:WDC), Korea Electric Power Corporation (NYSE:KEP), Ulta Beauty, Inc. (NASDAQ:ULTA), and Discovery, Inc. (NASDAQ:DISCA). This group of stocks’ market values match PBA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WDC | 33 | 1201913 | -10 |
| KEP | 4 | 33627 | -4 |
| ULTA | 40 | 830823 | -4 |
| DISCA | 23 | 521353 | 3 |
| Average | 25 | 646929 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $647 million. That figure was $157 million in PBA’s case. Ulta Beauty, Inc. (NASDAQ:ULTA) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 4 bullish hedge fund positions. Pembina Pipeline Corp (NYSE:PBA) 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 ULTA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
