Is PS Business Parks Inc (NYSE:PSB) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in PS Business Parks Inc (NYSE:PSB) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PSB to other stocks including Smartsheet Inc. (NYSE:SMAR), Deckers Outdoor Corp (NYSE:DECK), and Blackstone Mortgage Trust Inc (NYSE:BXMT) to get a better sense of its popularity.
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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the recent hedge fund action surrounding PS Business Parks Inc (NYSE:PSB).
How have hedgies been trading PS Business Parks Inc (NYSE:PSB)?
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PSB over the last 15 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Winton Capital Management, managed by David Harding, holds the largest position in PS Business Parks Inc (NYSE:PSB). Winton Capital Management has a $23.8 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $12.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism encompass Noam Gottesman’s GLG Partners, John Overdeck and David Siegel’s Two Sigma Advisors and Cliff Asness’s AQR Capital Management.
Seeing as PS Business Parks Inc (NYSE:PSB) has faced bearish sentiment from the smart money, we can see that there is a sect of hedgies that elected to cut their entire stakes by the end of the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group said goodbye to the largest position of the 700 funds watched by Insider Monkey, comprising close to $0.9 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PS Business Parks Inc (NYSE:PSB) but similarly valued. These stocks are Smartsheet Inc. (NYSE:SMAR), Deckers Outdoor Corp (NYSE:DECK), Blackstone Mortgage Trust Inc (NYSE:BXMT), and Essent Group Ltd (NYSE:ESNT). This group of stocks’ market valuations resemble PSB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMAR | 30 | 568636 | 13 |
| DECK | 29 | 593943 | 8 |
| BXMT | 15 | 101684 | -1 |
| ESNT | 27 | 309747 | -1 |
| Average | 25.25 | 393503 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $54 million in PSB’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Blackstone Mortgage Trust Inc (NYSE:BXMT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks PS Business Parks Inc (NYSE:PSB) is even less popular than BXMT. Hedge funds clearly dropped the ball on PSB as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on PSB as the stock returned 13.4% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
