The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards People’s United Financial, Inc. (NASDAQ:PBCT).
Is People’s United Financial, Inc. (NASDAQ:PBCT) a splendid stock to buy now? Investors who are in the know are turning less bullish. The number of long hedge fund bets dropped by 2 recently. Our calculations also showed that PBCT isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the fresh hedge fund action encompassing People’s United Financial, Inc. (NASDAQ:PBCT).
How have hedgies been trading People’s United Financial, Inc. (NASDAQ:PBCT)?
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PBCT over the last 16 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in People’s United Financial, Inc. (NASDAQ:PBCT), which was worth $50.9 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $34.5 million worth of shares. Moreover, AQR Capital Management, Gillson Capital, and Two Sigma Advisors were also bullish on People’s United Financial, Inc. (NASDAQ:PBCT), allocating a large percentage of their portfolios to this stock.
Judging by the fact that People’s United Financial, Inc. (NASDAQ:PBCT) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedgies that slashed their positions entirely last quarter. Interestingly, John D. Gillespie’s Prospector Partners sold off the biggest stake of the 750 funds watched by Insider Monkey, comprising about $2.1 million in stock. Ray Dalio’s fund, Bridgewater Associates, also sold off its stock, about $2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as People’s United Financial, Inc. (NASDAQ:PBCT) but similarly valued. We will take a look at Buckeye Partners, L.P. (NYSE:BPL), Dolby Laboratories, Inc. (NYSE:DLB), Israel Chemicals Ltd. (NYSE:ICL), and Elbit Systems Ltd. (NASDAQ:ESLT). This group of stocks’ market valuations are similar to PBCT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BPL | 13 | 166135 | 8 |
| DLB | 27 | 502234 | -2 |
| ICL | 6 | 37150 | 2 |
| ESLT | 5 | 19217 | 3 |
| Average | 12.75 | 181184 | 2.75 |
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 $181 million. That figure was $130 million in PBCT’s case. Dolby Laboratories, Inc. (NYSE:DLB) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 5 bullish hedge fund positions. People’s United Financial, Inc. (NASDAQ:PBCT) 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 are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PBCT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PBCT were disappointed as the stock returned -5.8% during the third 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
