After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards PennyMac Financial Services Inc (NYSE:PFSI).
Is PennyMac Financial Services Inc (NYSE:PFSI) a safe investment now? The best stock pickers were getting more bullish. The number of long hedge fund positions improved by 1 lately. PennyMac Financial Services Inc (NYSE:PFSI) was in 26 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 31. Our calculations also showed that PFSI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 25 hedge funds in our database with PFSI holdings at the end of March.
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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Platt of BlueCrest Capital Mgmt.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s check out the recent hedge fund action regarding PennyMac Financial Services Inc (NYSE:PFSI).
Do Hedge Funds Think PFSI Is A Good Stock To Buy Now?
At second quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PFSI over the last 24 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, MFN Partners, managed by Farhad Nanji and Michael DeMichele, holds the number one position in PennyMac Financial Services Inc (NYSE:PFSI). MFN Partners has a $218 million position in the stock, comprising 11.7% of its 13F portfolio. Coming in second is Basswood Capital, managed by Matthew Lindenbaum, which holds a $152 million position; 6.4% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish include Richard Mashaal’s Rima Senvest Management, Charles Clough’s Clough Capital Partners and Paul Reeder and Edward Shapiro’s PAR Capital Management. In terms of the portfolio weights assigned to each position MFN Partners allocated the biggest weight to PennyMac Financial Services Inc (NYSE:PFSI), around 11.71% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, earmarking 6.36 percent of its 13F equity portfolio to PFSI.
As industrywide interest jumped, specific money managers have jumped into PennyMac Financial Services Inc (NYSE:PFSI) headfirst. BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, initiated the most outsized position in PennyMac Financial Services Inc (NYSE:PFSI). BlueCrest Capital Mgmt. had $19.7 million invested in the company at the end of the quarter. Andrew Kurita’s Kettle Hill Capital Management also made a $8 million investment in the stock during the quarter. The other funds with brand new PFSI positions are Leon Cooperman’s Omega Advisors, Matthew Hulsizer’s PEAK6 Capital Management, and Brandon Haley’s Holocene Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to PennyMac Financial Services Inc (NYSE:PFSI). These stocks are LivaNova PLC (NASDAQ:LIVN), Olink Holding AB (publ) (NASDAQ:OLK), Weingarten Realty Investors (NYSE:WRI), Ultrapar Participacoes SA (NYSE:UGP), Summit Materials Inc (NYSE:SUM), Enel Chile S.A. (NYSE:ENIC), and TechnipFMC plc (NYSE:FTI). All of these stocks’ market caps match PFSI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LIVN | 36 | 901546 | 8 |
| OLK | 16 | 116314 | -4 |
| WRI | 20 | 266193 | 6 |
| UGP | 10 | 15951 | 3 |
| SUM | 20 | 110138 | -12 |
| ENIC | 7 | 20092 | 0 |
| FTI | 25 | 442009 | 0 |
| Average | 19.1 | 267463 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $686 million in PFSI’s case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 7 bullish hedge fund positions. PennyMac Financial Services Inc (NYSE:PFSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PFSI is 63.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on PFSI as the stock returned 7.8% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Pnmac Holdings Inc. (NYSE:PFSI)
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Disclosure: None. This article was originally published at Insider Monkey.
