Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. After several tireless days we have finished crunching the numbers from nearly 835 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards PBF Energy Inc (NYSE:PBF).
PBF Energy Inc (NYSE:PBF) has experienced an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that PBF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Charles Davidson of Wexford Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the recent hedge fund action surrounding PBF Energy Inc (NYSE:PBF).
How are hedge funds trading PBF Energy Inc (NYSE:PBF)?
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the third quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in PBF a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of PBF Energy Inc (NYSE:PBF), with a stake worth $70.4 million reported as of the end of September. Trailing Millennium Management was Citadel Investment Group, which amassed a stake valued at $56.3 million. Renaissance Technologies, D E Shaw, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to PBF Energy Inc (NYSE:PBF), around 1.88% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 1.13 percent of its 13F equity portfolio to PBF.
Now, key money managers have jumped into PBF Energy Inc (NYSE:PBF) headfirst. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, created the largest position in PBF Energy Inc (NYSE:PBF). Wexford Capital had $3 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $2.4 million position during the quarter. The other funds with brand new PBF positions are Lee Ainslie’s Maverick Capital, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Mika Toikka’s AlphaCrest Capital 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 Yamana Gold Inc. (NYSE:AUY), SiteOne Landscape Supply, Inc. (NYSE:SITE), AppFolio Inc (NASDAQ:APPF), and ASGN Incorporated (NYSE:ASGN). All of these stocks’ market caps are closest to PBF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AUY | 16 | 262811 | -5 |
| SITE | 15 | 108926 | 1 |
| APPF | 16 | 240264 | 4 |
| ASGN | 18 | 98512 | 1 |
| Average | 16.25 | 177628 | 0.25 |
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 $178 million. That figure was $280 million in PBF’s case. ASGN Incorporated (NYSE:ASGN) is the most popular stock in this table. On the other hand SiteOne Landscape Supply, Inc. (NYSE:SITE) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks PBF Energy Inc (NYSE:PBF) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately PBF wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PBF were disappointed as the stock returned -78.6% during the first two and a half months of 2020 (through March 25th) 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
