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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about PBF Logistics LP (NYSE:PBFX) in this article.
PBF Logistics LP (NYSE:PBFX) has experienced a decrease in hedge fund interest in recent months. PBF Logistics LP (NYSE:PBFX) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. There were 4 hedge funds in our database with PBFX positions at the end of the second quarter. Our calculations also showed that PBFX isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a glance at the latest hedge fund action regarding PBF Logistics LP (NYSE:PBFX).
What does smart money think about PBF Logistics LP (NYSE:PBFX)?
Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. By comparison, 1 hedge funds held shares or bullish call options in PBFX a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in PBF Logistics LP (NYSE:PBFX). Arrowstreet Capital has a $2.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position 683 Capital Partners allocated the biggest weight to PBF Logistics LP (NYSE:PBFX), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.0041 percent of its 13F equity portfolio to PBFX.
Due to the fact that PBF Logistics LP (NYSE:PBFX) has experienced declining sentiment from hedge fund managers, it's easy to see that there is a sect of hedgies who sold off their full holdings in the third quarter. Interestingly, Ken Griffin's Citadel Investment Group cut the biggest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $0.7 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as PBF Logistics LP (NYSE:PBFX) but similarly valued. We will take a look at U.S. Lime & Minerals Inc. (NASDAQ:USLM), TORM plc (NASDAQ:TRMD), Community Health Systems, Inc. (NYSE:CYH), IVERIC bio, Inc. (NASDAQ:ISEE), Brigham Minerals, Inc. (NYSE:MNRL), TrustCo Bank Corp NY (NASDAQ:TRST), and Atreca, Inc. (NASDAQ:BCEL). This group of stocks' market values resemble PBFX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USLM,5,39228,1 TRMD,3,362385,0 CYH,22,194242,4 ISEE,26,278032,-5 MNRL,19,75169,3 TRST,14,16105,1 BCEL,12,162774,3 Average,14.4,161134,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $3 million in PBFX's case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand TORM plc (NASDAQ:TRMD) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks PBF Logistics LP (NYSE:PBFX) is even less popular than TRMD. Our overall hedge fund sentiment score for PBFX is 26.5. 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. Hedge funds clearly dropped the ball on PBFX 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on PBFX as the stock returned 21.3% since Q3 (through November 23rd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.