We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Provident Financial Services, Inc. (NYSE:PFS).
Is Provident Financial Services, Inc. (NYSE:PFS) an exceptional investment right now? The smart money is betting on the stock. The number of bullish hedge fund positions moved up by 4 in recent months. Our calculations also showed that PFS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). PFS was in 16 hedge funds’ portfolios at the end of December. There were 12 hedge funds in our database with PFS positions at the end of the previous quarter.
In the financial world there are dozens of formulas stock market investors put to use to appraise stocks. Two of the most innovative formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite money managers can outperform their index-focused peers by a significant margin (see the details here).
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when 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 new hedge fund action regarding Provident Financial Services, Inc. (NYSE:PFS).
How are hedge funds trading Provident Financial Services, Inc. (NYSE:PFS)?
At Q4’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in PFS over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the largest position in Provident Financial Services, Inc. (NYSE:PFS). Renaissance Technologies has a $29.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Millennium Management, led by Israel Englander, holding a $14.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism comprise Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Provident Financial Services, Inc. (NYSE:PFS), around 0.25% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to PFS.
Consequently, key money managers have jumped into Provident Financial Services, Inc. (NYSE:PFS) headfirst. D E Shaw, managed by D. E. Shaw, established the largest position in Provident Financial Services, Inc. (NYSE:PFS). D E Shaw had $0.8 million invested in the company at the end of the quarter. Schonfeld Strategic Advisors also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new PFS investors: Matthew Hulsizer’s PEAK6 Capital Management, Qing Li’s Sciencast Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Provident Financial Services, Inc. (NYSE:PFS) but similarly valued. These stocks are Zuora, Inc. (NYSE:ZUO), LGI Homes Inc (NASDAQ:LGIH), The RealReal, Inc. (NASDAQ:REAL), and Tronox Holdings plc (NYSE:TROX). This group of stocks’ market caps resemble PFS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZUO | 26 | 160649 | 0 |
| LGIH | 13 | 66254 | -2 |
| REAL | 13 | 153969 | -8 |
| TROX | 23 | 138148 | 3 |
| Average | 18.75 | 129755 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $60 million in PFS’s case. Zuora, Inc. (NYSE:ZUO) is the most popular stock in this table. On the other hand LGI Homes Inc (NASDAQ:LGIH) is the least popular one with only 13 bullish hedge fund positions. Provident Financial Services, Inc. (NYSE:PFS) 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately PFS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PFS investors were disappointed as the stock returned -46.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
