The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Postal Realty Trust, Inc. (NYSE:PSTL).
Hedge fund interest in Postal Realty Trust, Inc. (NYSE:PSTL) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Frequency Electronics, Inc. (NASDAQ:FEIM), Harvard Bioscience, Inc. (NASDAQ:HBIO), and RADCOM Ltd. (NASDAQ:RDCM) to gather more data points. Our calculations also showed that PSTL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
James Dondero of Highland Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the key hedge fund action regarding Postal Realty Trust, Inc. (NYSE:PSTL).
What does smart money think about Postal Realty Trust, Inc. (NYSE:PSTL)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in PSTL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Postal Realty Trust, Inc. (NYSE:PSTL), worth close to $7.4 million, corresponding to 0.1% of its total 13F portfolio. The second largest stake is held by Eduardo Abush of Waterfront Capital Partners, with a $6.3 million position; 0.8% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions consist of James Dondero’s Highland Capital Management, Frederick DiSanto’s Ancora Advisors and . In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Postal Realty Trust, Inc. (NYSE:PSTL), around 0.78% of its 13F portfolio. Highland Capital Management is also relatively very bullish on the stock, setting aside 0.61 percent of its 13F equity portfolio to PSTL.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Postal Realty Trust, Inc. (NYSE:PSTL) but similarly valued. These stocks are Frequency Electronics, Inc. (NASDAQ:FEIM), Harvard Bioscience, Inc. (NASDAQ:HBIO), RADCOM Ltd. (NASDAQ:RDCM), and Applied Genetic Technologies Corp (NASDAQ:AGTC). This group of stocks’ market values resemble PSTL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FEIM | 3 | 8954 | 0 |
| HBIO | 11 | 22612 | -3 |
| RDCM | 4 | 9385 | -1 |
| AGTC | 12 | 22216 | 5 |
| Average | 7.5 | 15792 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $18 million in PSTL’s case. Applied Genetic Technologies Corp (NASDAQ:AGTC) is the most popular stock in this table. On the other hand Frequency Electronics, Inc. (NASDAQ:FEIM) is the least popular one with only 3 bullish hedge fund positions. Postal Realty Trust, Inc. (NYSE:PSTL) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately PSTL wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PSTL investors were disappointed as the stock returned 8.3% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Postal Realty Trust Inc. (NYSE:PSTL)
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Disclosure: None. This article was originally published at Insider Monkey.
