The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Plum Creek Timber Co. Inc. (NYSE:PCL) from the perspective of those elite funds.
Plum Creek Timber Co. Inc. (NYSE:PCL) was in 16 hedge funds’ portfolios at the end of September. PCL investors should be aware of an increase in activity from the world’s largest hedge funds of late. There were 14 hedge funds in our database with PCL positions at the end of the previous quarter. At the end of this article we will also compare PCL to other stocks including Franco-Nevada Corporation (NYSE:FNV), DexCom, Inc. (NASDAQ:DXCM), and Robert Half International Inc. (NYSE:RHI) to get a better sense of its popularity.
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In the financial world there are plenty of formulas market participants can use to analyze stocks. Some of the most innovative formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outperform the market by a solid amount (see the details here).
With all of this in mind, let’s review the new action surrounding Plum Creek Timber Co. Inc. (NYSE:PCL).
What does the smart money think about Plum Creek Timber Co. Inc. (NYSE:PCL)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies holds the biggest position in Plum Creek Timber Co. Inc. (NYSE:PCL). Renaissance Technologies has an $43.2 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds an $27.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions contain Phill Gross and Robert Atchinson’s Adage Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Winton Capital Management, managed by David Harding, assembled the most valuable position in Plum Creek Timber Co. Inc. (NYSE:PCL). Winton Capital Management had $24.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Plum Creek Timber Co. Inc. (NYSE:PCL). We will take a look at Franco-Nevada Corporation (NYSE:FNV), DexCom, Inc. (NASDAQ:DXCM), Robert Half International Inc. (NYSE:RHI), and CIT Group Inc. (NYSE:CIT). This group of stocks’ market values match PCL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FNV | 15 | 477360 | -1 |
| DXCM | 30 | 362181 | 5 |
| RHI | 28 | 225667 | 1 |
| CIT | 28 | 1278831 | -5 |
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $586 million, below the $613 million figure in PCL’s case. DexCom, Inc. (NASDAQ:DXCM) is the most popular stock in this table. On the other hand Franco-Nevada Corporation (NYSE:FNV) is the least popular one with only 15 bullish hedge fund positions. Plum Creek Timber Co. Inc. (NYSE:PCL) 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. In this regard DXCM might be a better candidate to consider a long position.
