Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of People's United Financial, Inc. (NASDAQ:PBCT) based on that data.
People's United Financial, Inc. (NASDAQ:PBCT) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds' portfolios at the end of March. At the end of this article we will also compare PBCT to other stocks including Steel Dynamics, Inc. (NASDAQ:STLD), First American Financial Corp (NYSE:FAF), and PG&E Corporation (NYSE:PCG) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_256989" align="aligncenter" width="397"] Dmitry Balyasny of Balyasny Asset 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 trades like this one. 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. With all of this in mind we're going to go over the new hedge fund action encompassing People's United Financial, Inc. (NASDAQ:PBCT).
How have hedgies been trading People's United Financial, Inc. (NASDAQ:PBCT)?
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in PBCT a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in People's United Financial, Inc. (NASDAQ:PBCT) was held by AQR Capital Management, which reported holding $14.7 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $10.7 million position. Other investors bullish on the company included Hourglass Capital, Citadel Investment Group, and Engineers Gate Manager. In terms of the portfolio weights assigned to each position Hourglass Capital allocated the biggest weight to People's United Financial, Inc. (NASDAQ:PBCT), around 1.6% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, setting aside 0.45 percent of its 13F equity portfolio to PBCT.
Seeing as People's United Financial, Inc. (NASDAQ:PBCT) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there were a few funds that slashed their positions entirely last quarter. At the top of the heap, Daniel Johnson's Gillson Capital dropped the biggest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $18.6 million in stock. Paul Magidson, Jonathan Cohen. And Ostrom Enders's fund, Castine Capital Management, also cut its stock, about $11.9 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as People's United Financial, Inc. (NASDAQ:PBCT) but similarly valued. We will take a look at Steel Dynamics, Inc. (NASDAQ:STLD), First American Financial Corp (NYSE:FAF), PG&E Corporation (NYSE:PCG), and Nuance Communications Inc. (NASDAQ:NUAN). This group of stocks' market valuations are similar to PBCT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STLD,27,330665,-8 FAF,40,525520,-2 PCG,48,1984927,-2 NUAN,42,764864,3 Average,39.25,901494,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.25 hedge funds with bullish positions and the average amount invested in these stocks was $901 million. That figure was $43 million in PBCT's case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand Steel Dynamics, Inc. (NASDAQ:STLD) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks People's United Financial, Inc. (NASDAQ:PBCT) is even less popular than STLD. Hedge funds dodged a bullet by taking a bearish stance towards PBCT. Our calculations showed that the top 10 most popular hedge fund stocks 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 managed to beat the market by 14.2 percentage points. Unfortunately PBCT wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); PBCT investors were disappointed as the stock returned 17.3% during the second quarter (through June 10th) 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 most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.