Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Pitney Bowes Inc. (NYSE:PBI).
Is Pitney Bowes Inc. (NYSE:PBI) a cheap investment today? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets increased by 1 recently. Our calculations also showed that PBI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). PBI was in 19 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with PBI holdings at the end of the previous quarter.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andy Redleaf of Whitebox Advisors
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 key hedge fund action regarding Pitney Bowes Inc. (NYSE:PBI).
What does smart money think about Pitney Bowes Inc. (NYSE:PBI)?
Heading into the fourth quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PBI over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bill Miller’s Miller Value Partners has the most valuable position in Pitney Bowes Inc. (NYSE:PBI), worth close to $19 million, corresponding to 0.8% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $13.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of David E. Shaw’s D E Shaw, Renaissance Technologies and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Miller Value Partners allocated the biggest weight to Pitney Bowes Inc. (NYSE:PBI), around 0.76% of its 13F portfolio. Fondren Management is also relatively very bullish on the stock, setting aside 0.55 percent of its 13F equity portfolio to PBI.
Consequently, some big names have been driving this bullishness. Whitebox Advisors, managed by Andy Redleaf, initiated the largest position in Pitney Bowes Inc. (NYSE:PBI). Whitebox Advisors had $1.8 million invested in the company at the end of the quarter. Bradley Louis Radoff’s Fondren Management also initiated a $0.7 million position during the quarter. The only other fund with a brand new PBI position is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Pitney Bowes Inc. (NYSE:PBI) but similarly valued. We will take a look at Northern Oil & Gas, Inc. (NYSE:NOG), Lakeland Bancorp, Inc. (NASDAQ:LBAI), Benefitfocus Inc (NASDAQ:BNFT), and Twist Bioscience Corporation (NASDAQ:TWST). This group of stocks’ market caps resemble PBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NOG | 19 | 135625 | 0 |
| LBAI | 12 | 34546 | 1 |
| BNFT | 14 | 30746 | -1 |
| TWST | 10 | 67289 | 1 |
| Average | 13.75 | 67052 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $73 million in PBI’s case. Northern Oil & Gas, Inc. (NYSE:NOG) is the most popular stock in this table. On the other hand Twist Bioscience Corporation (NASDAQ:TWST) is the least popular one with only 10 bullish hedge fund positions. Pitney Bowes Inc. (NYSE:PBI) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PBI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PBI were disappointed as the stock returned 4.1% during the fourth quarter (through the end of November) 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.
