The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards PennyMac Financial Services Inc (NYSE:PFSI).
PennyMac Financial Services Inc (NYSE:PFSI) investors should be aware of an increase in enthusiasm from smart money in recent months. PFSI was in 13 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with PFSI positions at the end of the previous quarter. At the end of this article we will also compare PFSI to other stocks including AV Homes Inc (NASDAQ:AVHI), Steel Partners Holdings LP (NYSE:SPLP), and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Hedge fund activity in PennyMac Financial Services Inc (NYSE:PFSI)
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 8% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in PFSI at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Omega Advisors, led by Leon Cooperman, holds the number one position in PennyMac Financial Services Inc (NYSE:PFSI). Omega Advisors has a $39.3 million position in the stock, comprising 1.2% of its 13F portfolio. On Omega Advisors’ heels is Rima Senvest Management, led by Richard Mashaal, which holds a $35 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Andrew Goldman’s Seven Locks Capital Management, Matthew Lindenbaum’s Basswood Capital and Paul Reeder and Edward Shapiro’s PAR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key money managers have been driving this bullishness. Millennium Management assembled the largest position in PennyMac Financial Services Inc (NYSE:PFSI). Millennium Management had $0.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and 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 PennyMac Financial Services Inc (NYSE:PFSI) but similarly valued. We will take a look at AV Homes Inc (NASDAQ:AVHI), Steel Partners Holdings LP (NYSE:SPLP), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), and Heska Corp (NASDAQ:HSKA). This group of stocks’ market values are similar to PFSI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVHI | 3 | 23481 | -1 |
| SPLP | 7 | 33237 | 0 |
| SPPI | 11 | 40022 | -3 |
| HSKA | 11 | 32670 | -1 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $111 million in PFSI’s case. Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is the most popular stock in this table. On the other hand AV Homes Inc (NASDAQ:AVHI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks PennyMac Financial Services Inc (NYSE:PFSI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
