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Here is What Hedge Funds Think About Pembina Pipeline Corp (PBA)

Nina Todic

Is Pembina Pipeline Corp (NYSE:PBA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Pembina Pipeline Corp (NYSE:PBA) ready to rally soon? The best stock pickers are taking a bearish view. The number of long hedge fund positions retreated by 3 lately. Our calculations also showed that PBA isn't among the 30 most popular stocks among hedge funds. PBA was in 14 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 17 hedge funds in our database with PBA positions at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CITADEL INVESTMENT GROUP

We're going to view the recent hedge fund action encompassing Pembina Pipeline Corp (NYSE:PBA).

What have hedge funds been doing with Pembina Pipeline Corp (NYSE:PBA)?

At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PBA over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

PBA

The largest stake in Pembina Pipeline Corp (NYSE:PBA) was held by Citadel Investment Group, which reported holding $22.9 million worth of stock at the end of September. It was followed by D E Shaw with a $19.3 million position. Other investors bullish on the company included Perella Weinberg Partners, SIR Capital Management, and Point72 Asset Management.

Seeing as Pembina Pipeline Corp (NYSE:PBA) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of hedgies who sold off their full holdings by the end of the third quarter. Interestingly, Jim Simons's Renaissance Technologies cut the largest stake of the "upper crust" of funds watched by Insider Monkey, totaling close to $7.5 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also said goodbye to its stock, about $5.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds by the end of the third quarter.

Let's check out hedge fund activity in other stocks similar to Pembina Pipeline Corp (NYSE:PBA). These stocks are Fastenal Company (NASDAQ:FAST), Evergy, Inc. (NYSE:EVRG), Freeport-McMoRan Inc. (NYSE:FCX), and DXC Technology Company (NYSE:DXC). This group of stocks' market caps match PBA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FAST,25,1016970,2 EVRG,25,1246360,2 FCX,43,1504401,-4 DXC,43,1704996,-7 Average,34,1368182,-1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1368 million. That figure was $100 million in PBA's case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Fastenal Company (NASDAQ:FAST) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Pembina Pipeline Corp (NYSE:PBA) is even less popular than FAST. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Only A few hedge funds were also right about betting on PBA as the stock returned 26.1% and outperformed the market as well.

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

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