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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Pennsylvania Real Estate Investment Trust (NYSE:PEI).
Is Pennsylvania Real Estate Investment Trust (NYSE:PEI) a buy right now? Hedge funds are getting more bullish. The number of bullish hedge fund bets moved up by 2 recently. Our calculations also showed that PEI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). PEI was in 6 hedge funds' portfolios at the end of the first quarter of 2020. There were 4 hedge funds in our database with PEI positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_27676" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the key hedge fund action encompassing Pennsylvania Real Estate Investment Trust (NYSE:PEI).
Hedge fund activity in Pennsylvania Real Estate Investment Trust (NYSE:PEI)
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in PEI a year ago. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Pennsylvania Real Estate Investment Trust (NYSE:PEI) was held by ZWEIG DIMENNA PARTNERS, which reported holding $0.6 million worth of stock at the end of September. It was followed by Segantii Capital with a $0.2 million position. Other investors bullish on the company included Millennium Management, ExodusPoint Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position ZWEIG DIMENNA PARTNERS allocated the biggest weight to Pennsylvania Real Estate Investment Trust (NYSE:PEI), around 0.08% of its 13F portfolio. Segantii Capital is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to PEI.
Consequently, some big names have jumped into Pennsylvania Real Estate Investment Trust (NYSE:PEI) headfirst. Segantii Capital, managed by Simon Sadler, created the most outsized position in Pennsylvania Real Estate Investment Trust (NYSE:PEI). Segantii Capital had $0.2 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0.1 million investment in the stock during the quarter. The only other fund with a brand new PEI position is Ken Griffin's Citadel Investment Group.
Let's check out hedge fund activity in other stocks similar to Pennsylvania Real Estate Investment Trust (NYSE:PEI). We will take a look at HC2 Holdings Inc (NYSE:HCHC), Airgain, Inc. (NASDAQ:AIRG), Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), and TFF Pharmaceuticals, Inc. (NASDAQ:TFFP). This group of stocks' market valuations are similar to PEI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HCHC,15,3815,3 AIRG,4,3367,0 RBKB,2,4488,0 TFFP,2,2438,0 Average,5.75,3527,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $1 million in PEI's case. HC2 Holdings Inc (NYSE:HCHC) is the most popular stock in this table. On the other hand Rhinebeck Bancorp, Inc. (NASDAQ:RBKB) is the least popular one with only 2 bullish hedge fund positions. Pennsylvania Real Estate Investment Trust (NYSE:PEI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on PEI as the stock returned 107.8% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.