We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like PBF Energy Inc (NYSE:PBF).
Is PBF Energy Inc (NYSE:PBF) a buy here? Investors who are in the know are betting on the stock. The number of long hedge fund bets inched up by 2 lately. Our calculations also showed that PBF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are dozens of formulas shareholders can use to size up publicly traded companies. Some of the less known formulas are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top fund managers can outpace the broader indices by a healthy margin (see the details here).
Cliff Asness of AQR Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action encompassing PBF Energy Inc (NYSE:PBF).
How are hedge funds trading PBF Energy Inc (NYSE:PBF)?
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in PBF a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the number one position in PBF Energy Inc (NYSE:PBF), worth close to $68.9 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, managed by David E. Shaw, which holds a $29 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise Cliff Asness’s AQR Capital Management, Renaissance Technologies and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to PBF Energy Inc (NYSE:PBF), around 5.63% of its portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 1.47 percent of its 13F equity portfolio to PBF.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in PBF Energy Inc (NYSE:PBF). Balyasny Asset Management had $8.3 million invested in the company at the end of the quarter. Frederick Tucker Golden’s Solas Capital Management also made a $5.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Guy Shahar’s DSAM Partners, and Sara Nainzadeh’s Centenus Global Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PBF Energy Inc (NYSE:PBF) but similarly valued. We will take a look at Five9 Inc (NASDAQ:FIVN), AppFolio Inc (NASDAQ:APPF), Semtech Corporation (NASDAQ:SMTC), and Balchem Corporation (NASDAQ:BCPC). This group of stocks’ market valuations are closest to PBF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FIVN | 31 | 579426 | 8 |
| APPF | 11 | 211977 | -1 |
| SMTC | 16 | 218316 | -1 |
| BCPC | 7 | 56560 | -2 |
| Average | 16.25 | 266570 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $245 million in PBF’s case. Five9 Inc (NASDAQ:FIVN) is the most popular stock in this table. On the other hand Balchem Corporation (NASDAQ:BCPC) is the least popular one with only 7 bullish hedge fund positions. PBF Energy Inc (NYSE:PBF) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on PBF as the stock returned 16.2% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
