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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Provident Financial Services, Inc. (NYSE:PFS) based on those filings.
Is PFS a good stock to buy now? Provident Financial Services, Inc. (NYSE:PFS) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that PFS 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Pliant Therapeutics, Inc. (NASDAQ:PLRX), National Bank Holdings Corp (NYSE:NBHC), and Taysha Gene Therapies, Inc. (NASDAQ:TSHA) to gather more data points.
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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
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 15 best blue chip stocks 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. Now let's take a look at the latest hedge fund action encompassing Provident Financial Services, Inc. (NYSE:PFS).
Do Hedge Funds Think PFS Is A Good Stock To Buy Now?
At third quarter's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in PFS a year ago. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Provident Financial Services, Inc. (NYSE:PFS), which was worth $10.4 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $2.2 million worth of shares. Two Sigma Advisors, D E Shaw, and PEAK6 Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to Provident Financial Services, Inc. (NYSE:PFS), around 0.06% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to PFS.
Judging by the fact that Provident Financial Services, Inc. (NYSE:PFS) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers who sold off their full holdings by the end of the third quarter. Intriguingly, Israel Englander's Millennium Management dropped the largest investment of the "upper crust" of funds monitored by Insider Monkey, totaling close to $4.4 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund sold off about $2.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Provident Financial Services, Inc. (NYSE:PFS) but similarly valued. These stocks are Pliant Therapeutics, Inc. (NASDAQ:PLRX), National Bank Holdings Corp (NYSE:NBHC), Taysha Gene Therapies, Inc. (NASDAQ:TSHA), ATN International, Inc. (NASDAQ:ATNI), Twin River Worldwide Holdings Inc. (NYSE:TRWH), Huami Corporation (NYSE:HMI), and Sohu.com Limited (NASDAQ:SOHU). This group of stocks' market values are closest to PFS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLRX,11,157744,-2 NBHC,6,45405,1 TSHA,15,72542,15 ATNI,9,47619,1 TRWH,17,164279,-1 HMI,7,14122,1 SOHU,14,111806,0 Average,11.3,87645,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $18 million in PFS's case. Twin River Worldwide Holdings Inc. (NYSE:TRWH) is the most popular stock in this table. On the other hand National Bank Holdings Corp (NYSE:NBHC) is the least popular one with only 6 bullish hedge fund positions. Provident Financial Services, Inc. (NYSE:PFS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PFS is 41.9. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on PFS as the stock returned 44.3% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.