Were Hedge Funds Right About The PNC Financial Services Group Inc. (PNC)?

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 The PNC Financial Services Group Inc. (NYSE:PNC).

Is The PNC Financial Services Group Inc. (NYSE:PNC) a healthy stock for your portfolio? Hedge funds were becoming less hopeful. The number of bullish hedge fund positions dropped by 1 in recent months. The PNC Financial Services Group Inc. (NYSE:PNC) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistic is 52. Our calculations also showed that PNC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 39 hedge funds in our database with PNC 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.

Phillip Gross of Adage Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, 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 we’re going to take a glance at the key hedge fund action surrounding The PNC Financial Services Group Inc. (NYSE:PNC).

Do Hedge Funds Think PNC Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 52 hedge funds with a bullish position in PNC a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in The PNC Financial Services Group Inc. (NYSE:PNC), which was worth $250 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $86.4 million worth of shares. Adage Capital Management, Balyasny Asset Management, and GAMCO Investors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Strycker View Capital allocated the biggest weight to The PNC Financial Services Group Inc. (NYSE:PNC), around 8.74% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, designating 3 percent of its 13F equity portfolio to PNC.

Judging by the fact that The PNC Financial Services Group Inc. (NYSE:PNC) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who sold off their full holdings in the second quarter. It’s worth mentioning that Andrew Sandler’s Sandler Capital Management cut the largest stake of the 750 funds watched by Insider Monkey, totaling about $4.9 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $4.1 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to The PNC Financial Services Group Inc. (NYSE:PNC). We will take a look at Brookfield Asset Management Inc. (NYSE:BAM), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), FedEx Corporation (NYSE:FDX), The Bank of Nova Scotia (NYSE:BNS), Mercadolibre Inc (NASDAQ:MELI), NetEase, Inc (NASDAQ:NTES), and CME Group Inc (NASDAQ:CME). All of these stocks’ market caps match PNC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 44.7 hedge funds with bullish positions and the average amount invested in these stocks was $2463 million. That figure was $728 million in PNC’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 14 bullish hedge fund positions. The PNC Financial Services Group Inc. (NYSE:PNC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PNC is 45.9. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on PNC as the stock returned 10% since the end of the second quarter (through 11/5) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.