Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
PBF Energy Inc (NYSE:PBF) was in 27 hedge funds’ portfolios at the end of September. PBF has seen a decrease in activity from the world’s largest hedge funds lately. There were 32 hedge funds in our database with PBF positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AllianceBernstein Holding LP (NYSE:AB), Platform Specialty Products Corp (NYSE:PAH), and Lancaster Colony Corp. (NASDAQ:LANC) to gather more data points.
Follow Pbf Energy Inc. (NYSE:PBF)
Follow Pbf Energy Inc. (NYSE:PBF)
To most market participants, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our experts look at the crème de la crème of this club, approximately 700 funds. These hedge fund managers watch over bulk of all hedge funds’ total capital, and by monitoring their top stock picks, Insider Monkey has figured out several investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Now, let’s view the latest action encompassing PBF Energy Inc (NYSE:PBF).
What have hedge funds been doing with PBF Energy Inc (NYSE:PBF)?
At the Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Seth Klarman’s Baupost Group has the most valuable position in PBF Energy Inc (NYSE:PBF), worth close to $311.2 million, amounting to 5.2% of its total 13F portfolio. On Baupost Group’s heels is D E Shaw, managed by D. E. Shaw, which holds an $150.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish encompass Robert Joseph Caruso’s Select Equity Group, John Griffin’s Blue Ridge Capital, and Jim Simons’ Renaissance Technologies.
Judging by the fact that PBF Energy Inc (NYSE:PBF) has faced a declining sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds who were dropping their entire stakes in the third quarter. At the top of the heap, Jeffrey Gendell’s Tontine Asset Management cut the largest stake of all the hedgies followed by Insider Monkey, valued at an estimated $4.7 million in stock. Andrew Goldman’s fund, Seven Locks Capital Management, also cut its holding, about $4.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
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. These stocks are AllianceBernstein Holding LP (NYSE:AB), Platform Specialty Products Corp (NYSE:PAH), Lancaster Colony Corp. (NASDAQ:LANC), and LATAM Airlines Group SA (ADR) (NYSE:LFL). This group of stocks’ market caps match PBF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AB | 8 | 78215 | -4 |
| PAH | 40 | 1382497 | -11 |
| LANC | 14 | 159939 | 1 |
| LFL | 4 | 18566 | -1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $410 million, compared to $784 million in PBF’s case. Platform Specialty Products Corp (NYSE:PAH) is the most popular stock in this table. On the other hand LATAM Airlines Group SA (ADR) (NYSE:LFL) is the least popular one with only 4 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. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PAH might be a better candidate to consider a long position.
