Should You Avoid PHH Corporation (PHH)?

PHH Corporation (NYSE:PHH) was in 30 hedge funds’ portfolio at the end of March. PHH has seen a decrease in activity from the world’s largest hedge funds lately. There were 33 hedge funds in our database with PHH holdings at the end of the previous quarter.

In the financial world, there are dozens of indicators market participants can use to monitor stocks. Some of the most useful are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best money managers can beat the market by a significant margin (see just how much).

Just as important, positive insider trading sentiment is another way to break down the stock market universe. Just as you’d expect, there are a variety of reasons for an executive to get rid of shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

Now, let’s take a peek at the key action encompassing PHH Corporation (NYSE:PHH).

Hedge fund activity in PHH Corporation (NYSE:PHH)

At the end of the first quarter, a total of 30 of the hedge funds we track were bullish in this stock, a change of -9% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Pennant Capital Management, managed by Alan Fournier, holds the largest position in PHH Corporation (NYSE:PHH). Pennant Capital Management has a $56.3 million position in the stock, comprising 1.1% of its 13F portfolio. Sitting at the No. 2 spot is Debra Fine of Fine Capital Partners, with a $51.5 million position; 5.1% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Doug Silverman and Alexander Klabin’s Senator Investment Group, Matt Sirovich and Jeremy Mindich’s Scopia Capital and Larry Foley and Paul Farrell’s Bronson Point Partners.

Because PHH Corporation (NYSE:PHH) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there were a few hedgies that elected to cut their full holdings last quarter. Intriguingly, Jim Simons’s Renaissance Technologies said goodbye to the biggest position of the “upper crust” of funds we track, valued at an estimated $8 million in stock.. Sander Gerber’s fund, Hudson Bay Capital Management, also cut its call options., about $6.8 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds last quarter.

What do corporate executives and insiders think about PHH Corporation (NYSE:PHH)?

Insider purchases made by high-level executives is best served when the company in question has experienced transactions within the past 180 days. Over the last six-month time period, PHH Corporation (NYSE:PHH) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to PHH Corporation (NYSE:PHH). These stocks are CapitalSource, Inc. (NYSE:CSE), First Cash Financial Services, Inc. (NASDAQ:FCFS), Nelnet, Inc. (NYSE:NNI), Cash America International, Inc. (NYSE:CSH), and World Acceptance Corp. (NASDAQ:WRLD). This group of stocks are in the credit services industry and their market caps are closest to PHH’s market cap.

With the results exhibited by the aforementioned research, retail investors should always watch hedge fund and insider trading activity, and PHH Corporation (NYSE:PHH) is an important part of this process.

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