In this article we will take a look at whether hedge funds think Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) the right pick for your portfolio? The smart money is becoming less confident. The number of long hedge fund bets were cut by 4 lately. Our calculations also showed that PPBI 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are plenty of tools stock traders have at their disposal to analyze publicly traded companies. Some of the most underrated tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top investment managers can trounce their index-focused peers by a very impressive amount (see the details here).
[caption id="attachment_221556" align="aligncenter" width="400"] Richard Driehaus of Driehaus Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the latest hedge fund action encompassing Pacific Premier Bancorp, Inc. (NASDAQ:PPBI).
How are hedge funds trading Pacific Premier Bancorp, Inc. (NASDAQ:PPBI)?
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in PPBI a year ago. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) was held by Cardinal Capital, which reported holding $22.8 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $2.2 million position. Other investors bullish on the company included GLG Partners, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), around 1.12% of its 13F portfolio. GLG Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to PPBI.
Judging by the fact that Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) has experienced falling interest from hedge fund managers, it's easy to see that there were a few funds who were dropping their full holdings heading into Q4. At the top of the heap, Minhua Zhang's Weld Capital Management cut the biggest investment of all the hedgies watched by Insider Monkey, totaling an estimated $1.3 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let's go over hedge fund activity in other stocks similar to Pacific Premier Bancorp, Inc. (NASDAQ:PPBI). We will take a look at Tri Continental Corporation (NYSE:TY), Victory Capital Holdings, Inc. (NASDAQ:VCTR), Marten Transport, Ltd (NASDAQ:MRTN), and GreenTree Hospitality Group Ltd. (NYSE:GHG). This group of stocks' market valuations are closest to PPBI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TY,3,2165,1 VCTR,8,64756,1 MRTN,16,46668,-1 GHG,4,25903,-4 Average,7.75,34873,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $30 million in PPBI's case. Marten Transport, Ltd (NASDAQ:MRTN) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 3 bullish hedge fund positions. Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately PPBI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PPBI were disappointed as the stock returned 15.2% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.