Hedge Funds Keep Buying Pitney Bowes Inc. (PBI)

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Pitney Bowes Inc. (NYSE:PBI).

Is Pitney Bowes Inc. (NYSE:PBI) an attractive investment right now? Money managers are taking a bullish view. The number of bullish hedge fund bets rose by 2 in recent months. PBI was in 21 hedge funds’ portfolios at the end of the third quarter of 2016. There were 19 hedge funds in our database with PBI holdings at the end of the previous quarter. At the end of this article we will also compare PBI to other stocks including Sunoco LP (NYSE:SUN), Diamond Offshore Drilling Inc (NYSE:DO), and Outfront Media Inc (NYSE:OUT) to get a better sense of its popularity.

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How are hedge funds trading Pitney Bowes Inc. (NYSE:PBI)?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 11% rise from the previous quarter, and third straight quarter with a rise as ownership of the stock among hedge funds pushes to a yearly high. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management has the number one position in Pitney Bowes Inc. (NYSE:PBI), worth close to $219.3 million, accounting for 1.9% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, founded by David E. Shaw, holding a $58.9 million position. Remaining hedge funds and institutional investors with similar optimism include Cliff Asness’ AQR Capital Management, Joel Greenblatt’s Gotham Asset Management and Anthony Scaramucci’s Skybridge Capital.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Breton Hill Capital, managed by Ray Carroll, established the biggest position in Pitney Bowes Inc. (NYSE:PBI). Breton Hill Capital had $7.6 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Roger Ibbotson’s Zebra Capital Management, and Andrew Weiss’ Weiss Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pitney Bowes Inc. (NYSE:PBI) but similarly valued. We will take a look at Sunoco LP (NYSE:SUN), Diamond Offshore Drilling Inc (NYSE:DO), Outfront Media Inc (NYSE:OUT), and Quanta Services Inc (NYSE:PWR). All of these stocks’ market caps are closest to PBI’s market cap.

As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $362 million in PBI’s case. Diamond Offshore Drilling Inc (NYSE:DO) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 12 bullish hedge fund positions. Pitney Bowes Inc. (NYSE:PBI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds really love. In this regard DO might be a better candidate to consider a long position in.

Disclosure: None