Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Protective Insurance Corporation (NASDAQ:PTVCB) from the perspective of those elite funds.
Is Protective Insurance Corporation (NASDAQ:PTVCB) going to take off soon? Investors who are in the know are buying. The number of bullish hedge fund bets increased by 3 in recent months. Our calculations also showed that PTVCB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). PTVCB was in 8 hedge funds’ portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with PTVCB holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the fresh hedge fund action surrounding Protective Insurance Corporation (NASDAQ:PTVCB).
What have hedge funds been doing with Protective Insurance Corporation (NASDAQ:PTVCB)?
Heading into the fourth quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the second quarter of 2019. On the other hand, there were a total of 7 hedge funds with a bullish position in PTVCB a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the biggest position in Protective Insurance Corporation (NASDAQ:PTVCB). Renaissance Technologies has a $11.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Intrepid Capital Management, led by Mark Travis, holding a $9.3 million position; 4.9% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Ron Bobman’s Capital Returns Management, David Harding’s Winton Capital Management and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Intrepid Capital Management allocated the biggest weight to Protective Insurance Corporation (NASDAQ:PTVCB), around 4.85% of its 13F portfolio. Capital Returns Management is also relatively very bullish on the stock, designating 1.73 percent of its 13F equity portfolio to PTVCB.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Capital Returns Management, managed by Ron Bobman, assembled the most valuable position in Protective Insurance Corporation (NASDAQ:PTVCB). Capital Returns Management had $1 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.8 million position during the quarter. The other funds with brand new PTVCB positions are Israel Englander’s Millennium Management and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Protective Insurance Corporation (NASDAQ:PTVCB) but similarly valued. We will take a look at Eiger BioPharmaceuticals, Inc. (NASDAQ:EIGR), First Choice Bancorp (NASDAQ:FCBP), MeetMe Inc (NYSE:MEET), and Noodles & Co (NASDAQ:NDLS). All of these stocks’ market caps match PTVCB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EIGR | 24 | 140387 | 3 |
| FCBP | 3 | 1334 | 2 |
| MEET | 10 | 49716 | -2 |
| NDLS | 14 | 78633 | 2 |
| Average | 12.75 | 67518 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $24 million in PTVCB’s case. Eiger BioPharmaceuticals, Inc. (NASDAQ:EIGR) is the most popular stock in this table. On the other hand First Choice Bancorp (NASDAQ:FCBP) is the least popular one with only 3 bullish hedge fund positions. Protective Insurance Corporation (NASDAQ:PTVCB) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PTVCB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PTVCB investors were disappointed as the stock returned -2.7% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
