Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren't very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds' top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn't perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Peoples Bancorp Inc. (NASDAQ:PEBO) was in 10 hedge funds' portfolios at the end of the third quarter of 2018. PEBO has seen an increase in hedge fund sentiment of late. There were 9 hedge funds in our database with PEBO holdings at the end of the previous quarter. Our calculations also showed that pebo isn't among the 30 most popular stocks among hedge funds.
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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a glance at the recent hedge fund action encompassing Peoples Bancorp Inc. (NASDAQ:PEBO).
How are hedge funds trading Peoples Bancorp Inc. (NASDAQ:PEBO)?
Heading into the fourth quarter of 2018, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PEBO over the last 13 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Peoples Bancorp Inc. (NASDAQ:PEBO), with a stake worth $16.6 million reported as of the end of September. Trailing Renaissance Technologies was Elizabeth Park Capital Management, which amassed a stake valued at $8 million. Bailard Inc, Millennium Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Peoples Bancorp Inc. (NASDAQ:PEBO) headfirst. Zebra Capital Management, managed by Roger Ibbotson, established the most outsized position in Peoples Bancorp Inc. (NASDAQ:PEBO). Zebra Capital Management had $0.2 million invested in the company at the end of the quarter. Frederick DiSanto's Ancora Advisors also initiated a $0 million position during the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Peoples Bancorp Inc. (NASDAQ:PEBO) but similarly valued. We will take a look at Petmed Express Inc (NASDAQ:PETS), Urstadt Biddle Properties Inc. (NYSE:UBP), Lindblad Expeditions Holdings Inc (NASDAQ:LIND), and Veritex Holdings Inc (NASDAQ:VBTX). This group of stocks' market valuations are closest to PEBO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PETS,18,136870,0 UBP,2,12301,0 LIND,14,92209,-2 VBTX,17,91770,5 Average,12.75,83288,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $28 million in PEBO's case. Petmed Express Inc (NASDAQ:PETS) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc. (NYSE:UBP) is the least popular one with only 2 bullish hedge fund positions. Peoples Bancorp Inc. (NASDAQ:PEBO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. In this regard PETS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.