Is PotlatchDeltic Corporation (NASDAQ:PCH) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is PotlatchDeltic Corporation (NASDAQ:PCH) a bargain? Hedge funds are turning less bullish. The number of bullish hedge fund bets retreated by 5 lately. Our calculations also showed that PCH isn't among the 30 most popular stocks among hedge funds (view video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are tons of metrics stock traders can use to appraise their holdings. A duo of the best metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top money managers can beat their index-focused peers by a significant amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to analyze the key hedge fund action encompassing PotlatchDeltic Corporation (NASDAQ:PCH).
What have hedge funds been doing with PotlatchDeltic Corporation (NASDAQ:PCH)?
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PCH over the last 16 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Southeastern Asset Management held the most valuable stake in PotlatchDeltic Corporation (NASDAQ:PCH), which was worth $180.5 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $101.6 million worth of shares. Moreover, Ancora Advisors, Citadel Investment Group, and Fisher Asset Management were also bullish on PotlatchDeltic Corporation (NASDAQ:PCH), allocating a large percentage of their portfolios to this stock.
Due to the fact that PotlatchDeltic Corporation (NASDAQ:PCH) has faced a decline in interest from the smart money, logic holds that there was a specific group of fund managers who were dropping their full holdings by the end of the second quarter. At the top of the heap, Chuck Royce's Royce & Associates sold off the biggest investment of the 750 funds followed by Insider Monkey, totaling an estimated $8.5 million in stock. Greg Poole's fund, Echo Street Capital Management, also cut its stock, about $3.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds by the end of the second quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as PotlatchDeltic Corporation (NASDAQ:PCH) but similarly valued. These stocks are Albany International Corp. (NYSE:AIN), Noah Holdings Limited (NYSE:NOAH), Resideo Technologies, Inc. (NYSE:REZI), and CNO Financial Group Inc (NYSE:CNO). This group of stocks' market caps resemble PCH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIN,15,82406,-1 NOAH,12,218313,-2 REZI,29,432922,-3 CNO,14,211942,1 Average,17.5,236396,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $321 million in PCH's case. Resideo Technologies, Inc. (NYSE:REZI) is the most popular stock in this table. On the other hand Noah Holdings Limited (NYSE:NOAH) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks PotlatchDeltic Corporation (NASDAQ:PCH) is even less popular than NOAH. Hedge funds clearly dropped the ball on PCH as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on PCH as the stock returned 6.4% during the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.