Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) worth your attention right now? Money managers are really actually turning less bullish. The number of long hedge fund investments shrunk by 3 in recent months. PPBI was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with PPBI positions at the end of the previous 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 Novocure Ltd (NASDAQ:NVCR), Kelly Services, Inc. (NASDAQ:KELYA), and TerraForm Global Inc (NASDAQ:GLBL) 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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What does the smart money think about Pacific Premier Bancorp, Inc. (NASDAQ:PPBI)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a fall of 23% from the second quarter of 2016. On the other hand, there were a total of 10 hedge funds with a bullish position in PPBI at the beginning of this year. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Matthew Lindenbaum of Basswood Capital holds the number one position in Pacific Premier Bancorp, Inc. (NASDAQ:PPBI). Basswood Capital has a $6.6 million position in the stock. On Basswood Capital’s heels is Richard Driehaus of Driehaus Capital holding a $5.5 million position. Some other professional money managers that are bullish comprise Brian Ashford-Russell and Tim Woolley’s Polar Capital, Cliff Asness’ AQR Capital Management and Jim Simons’ Renaissance Technologies, which is one of the largest hedge funds in the world. 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.
Because Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the biggest position of all the hedgies followed by Insider Monkey, valued at close to $0.6 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $0.3 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) but similarly valued. We will take a look at Novocure Ltd (NASDAQ:NVCR), Kelly Services, Inc. (NASDAQ:KELYA), TerraForm Global Inc (NASDAQ:GLBL), and Sandy Spring Bancorp Inc. (NASDAQ:SASR). All of these stocks’ market caps are similar to PPBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVCR | 8 | 44671 | 2 |
| KELYA | 10 | 37124 | 1 |
| GLBL | 15 | 124310 | -1 |
| SASR | 8 | 19400 | 2 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $29 million in PPBI’s case. TerraForm Global Inc (NASDAQ:GLBL) is the most popular stock in this table. On the other hand Novocure Ltd (NASDAQ:NVCR) is the least popular one with only 8 bullish hedge fund positions. Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) 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 GLBL might be a better candidate to consider taking a long position in.
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Disclosure: None
