Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about PS Business Parks Inc (NYSE:PSB).
PS Business Parks Inc (NYSE:PSB) has seen an increase in hedge fund interest lately. Our calculations also showed that PSB isn’t among the 30 most popular stocks among hedge funds.
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to check out the new hedge fund action regarding PS Business Parks Inc (NYSE:PSB).
What does the smart money think about PS Business Parks Inc (NYSE:PSB)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in PSB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Noam Gottesman’s GLG Partners has the largest position in PS Business Parks Inc (NYSE:PSB), worth close to $23 million, corresponding to 0.1% of its total 13F portfolio. The second largest stake is held by David Harding of Winton Capital Management, with a $19.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Jim Simons’s Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and Greg Poole’s Echo Street Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, assembled the largest position in PS Business Parks Inc (NYSE:PSB). Algert Coldiron Investors had $1.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.9 million position during the quarter. The following funds were also among the new PSB investors: Roger Ibbotson’s Zebra Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s also examine hedge fund activity in other stocks similar to PS Business Parks Inc (NYSE:PSB). These stocks are CACI International Inc (NYSE:CACI), Urban Outfitters, Inc. (NASDAQ:URBN), IBERIABANK Corporation (NASDAQ:IBKC), and Healthcare Realty Trust Inc (NYSE:HR). 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 |
|---|---|---|---|
| CACI | 18 | 122971 | -2 |
| URBN | 28 | 370543 | -3 |
| IBKC | 24 | 224156 | 3 |
| HR | 9 | 43650 | 5 |
| Average | 19.75 | 190330 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $72 million in PSB’s case. Urban Outfitters, Inc. (NASDAQ:URBN) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 9 bullish hedge fund positions. PS Business Parks Inc (NYSE:PSB) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately PSB wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); PSB investors were disappointed as the stock returned 12.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
