Hedge funds run by legendary names like George Soros 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 outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
PBF Energy Inc (NYSE:PBF) shareholders have witnessed an increase in hedge fund interest lately. PBF was in 26 hedge funds’ portfolios at the end of June. There were 22 hedge funds in our database with PBF holdings at the end of the previous quarter. Our calculations also showed that PBF isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the latest hedge fund action encompassing PBF Energy Inc (NYSE:PBF).
Hedge fund activity in PBF Energy Inc (NYSE:PBF)
At Q2’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the first quarter of 2019. By comparison, 25 hedge funds held shares or bullish call options in PBF a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in PBF Energy Inc (NYSE:PBF) was held by AQR Capital Management, which reported holding $95 million worth of stock at the end of March. It was followed by Millennium Management with a $88.4 million position. Other investors bullish on the company included Citadel Investment Group, Point State Capital, and D E Shaw.
As one would reasonably expect, key money managers were leading the bulls’ herd. Point State Capital, managed by Zach Schreiber, assembled the biggest position in PBF Energy Inc (NYSE:PBF). Point State Capital had $20.9 million invested in the company at the end of the quarter. Todd J. Kantor’s Encompass Capital Advisors also initiated a $16.3 million position during the quarter. The other funds with brand new PBF positions are Steve Cohen’s Point72 Asset Management, Robert Polak’s Anchor Bolt Capital, and George McCabe’s Portolan 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. These stocks are Methanex Corporation (NASDAQ:MEOH), Regal Beloit Corporation (NYSE:RBC), The Goodyear Tire & Rubber Company (NASDAQ:GT), and The Chemours Company (NYSE:CC). This group of stocks’ market valuations are closest to PBF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MEOH | 17 | 118229 | -5 |
| RBC | 17 | 178292 | 0 |
| GT | 30 | 424551 | 11 |
| CC | 28 | 359067 | -2 |
| Average | 23 | 270035 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $359 million in PBF’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand Methanex Corporation (NASDAQ:MEOH) is the least popular one with only 17 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 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 -12% during the third quarter 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.
