Provident Financial Services, Inc. (PFS): Are Hedge Funds Right About This Stock?

Provident Financial Services, Inc. (NYSE:PFS) has seen an increase in activity from the world’s largest hedge funds of late.

To most investors, hedge funds are seen as slow, outdated investment tools of years past. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the moguls of this group, around 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total capital, and by tracking their highest performing picks, we have formulated a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, optimistic insider trading activity is another way to parse down the world of equities. As the old adage goes: there are a number of incentives for an executive to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this strategy if piggybackers understand where to look (learn more here).

Now, it’s important to take a look at the key action surrounding Provident Financial Services, Inc. (NYSE:PFS).

How are hedge funds trading Provident Financial Services, Inc. (NYSE:PFS)?

Heading into Q2, a total of 8 of the hedge funds we track were long in this stock, a change of 33% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Cliff Asness’s AQR Capital Management had the biggest position in Provident Financial Services, Inc. (NYSE:PFS), worth close to $8 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $1.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Provident Financial Services, Inc. (NYSE:PFS) headfirst. Millennium Management, managed by Israel Englander, initiated the largest position in Provident Financial Services, Inc. (NYSE:PFS). Millennium Management had 1.3 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.6 million position during the quarter. The only other fund with a brand new PFS position is Steven Cohen’s SAC Capital Advisors.

What do corporate executives and insiders think about Provident Financial Services, Inc. (NYSE:PFS)?

Insider buying is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time period, Provident Financial Services, Inc. (NYSE:PFS) has experienced 3 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Provident Financial Services, Inc. (NYSE:PFS). These stocks are Kearny Financial Corp. (NASDAQ:KRNY), Northwest Bancshares, Inc. (NASDAQ:NWBI), Flagstar Bancorp Inc (NYSE:FBC), Astoria Financial Corp (NYSE:AF), and Columbia Banking System Inc (NASDAQ:COLB). This group of stocks belong to the savings & loans industry and their market caps are similar to PFS’s market cap.