Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is PotlatchDeltic Corporation (NASDAQ:PCH) a buy here? Investors who are in the know are taking an optimistic view. The number of long hedge fund positions increased by 2 in recent months. Our calculations also showed that PCH isn’t among the 30 most popular stocks among hedge funds. PCH was in 16 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with PCH holdings at the end of the previous quarter.
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 the 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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the latest hedge fund action surrounding PotlatchDeltic Corporation (NASDAQ:PCH).
What does the smart money think about PotlatchDeltic Corporation (NASDAQ:PCH)?
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. The graph below displays the number of hedge funds with bullish position in PCH over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in PotlatchDeltic Corporation (NASDAQ:PCH) was held by Renaissance Technologies, which reported holding $106.5 million worth of stock at the end of September. It was followed by Millennium Management with a $20.9 million position. Other investors bullish on the company included Royce & Associates, Citadel Investment Group, and Echo Street Capital Management.
With a general bullishness amongst the heavyweights, key money managers have jumped into PotlatchDeltic Corporation (NASDAQ:PCH) headfirst. Echo Street Capital Management, managed by Greg Poole, created the most valuable position in PotlatchDeltic Corporation (NASDAQ:PCH). Echo Street Capital Management had $7.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management and David Costen Haley’s HBK Investments.
Let’s now take a look at hedge fund activity in other stocks similar to PotlatchDeltic Corporation (NASDAQ:PCH). These stocks are Tegna Inc (NYSE:TGNA), Viavi Solutions Inc (NASDAQ:VIAV), Newmark Group, Inc. (NASDAQ:NMRK), and Albany International Corp. (NYSE:AIN). This group of stocks’ market valuations are similar to PCH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TGNA | 23 | 403399 | 6 |
| VIAV | 22 | 224277 | -7 |
| NMRK | 17 | 69578 | 7 |
| AIN | 13 | 91570 | 6 |
| Average | 18.75 | 197 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $197 million. That figure was $173 million in PCH’s case. Tegna Inc (NYSE:TGNA) is the most popular stock in this table. On the other hand Albany International Corp. (NYSE:AIN) is the least popular one with only 13 bullish hedge fund positions. PotlatchDeltic Corporation (NASDAQ:PCH) 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 TGNA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
