A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell's pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) during the quarter.
Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds' portfolios at the end of the first quarter of 2019. At the end of this article we will also compare PNFP to other stocks including ALLETE Inc (NYSE:ALE), SINA Corp (NASDAQ:SINA), and Amneal Pharmaceuticals, Inc. (NYSE:AMRX) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
We're going to take a peek at the recent hedge fund action regarding Pinnacle Financial Partners, Inc. (NASDAQ:PNFP).
What have hedge funds been doing with Pinnacle Financial Partners, Inc. (NASDAQ:PNFP)?
Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PNFP over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, 12th Street Asset Management was the largest shareholder of Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), with a stake worth $24.1 million reported as of the end of March. Trailing 12th Street Asset Management was Forest Hill Capital, which amassed a stake valued at $15.6 million. Mendon Capital Advisors, Elizabeth Park Capital Management, and Gillson Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Because Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) has experienced declining sentiment from hedge fund managers, it's easy to see that there exists a select few funds that slashed their positions entirely by the end of the third quarter. It's worth mentioning that Steve Cohen's Point72 Asset Management cut the biggest investment of all the hedgies watched by Insider Monkey, valued at about $18.9 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also cut its stock, about $7.7 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Pinnacle Financial Partners, Inc. (NASDAQ:PNFP). We will take a look at ALLETE Inc (NYSE:ALE), SINA Corp (NASDAQ:SINA), Amneal Pharmaceuticals, Inc. (NYSE:AMRX), and Brighthouse Financial, Inc. (NASDAQ:BHF). This group of stocks' market caps are closest to PNFP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALE,18,246797,0 SINA,24,474870,3 AMRX,8,27694,0 BHF,31,378363,7 Average,20.25,281931,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $88 million in PNFP's case. Brighthouse Financial, Inc. (NASDAQ:BHF) is the most popular stock in this table. On the other hand Amneal Pharmaceuticals, Inc. (NYSE:AMRX) is the least popular one with only 8 bullish hedge fund positions. Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on PNFP, though not to the same extent, as the stock returned 3.8% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.