Prudential Bancorp, Inc. (PBIP): Are Hedge Funds Right About This Stock?
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Prudential Bancorp, Inc. (NASDAQ:PBIP).
Prudential Bancorp, Inc. (NASDAQ:PBIP) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of March. At the end of this article we will also compare PBIP to other stocks including Energy Fuels Inc (NYSE:UUUU), Permian Basin Royalty Trust (NYSE:PBT), and Perion Network Ltd (NASDAQ:PERI) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Michael Price of MFP Investors[/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 stocks recommended/dissed by legendary Bill Miller. 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 let's go over the recent hedge fund action encompassing Prudential Bancorp, Inc. (NASDAQ:PBIP).
What have hedge funds been doing with Prudential Bancorp, Inc. (NASDAQ:PBIP)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PBIP over the last 18 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Seidman Investment Partnership, managed by Lawrence Seidman, holds the biggest position in Prudential Bancorp, Inc. (NASDAQ:PBIP). Seidman Investment Partnership has a $11.7 million position in the stock, comprising 14.4% of its 13F portfolio. On Seidman Investment Partnership's heels is Renaissance Technologies, with a $6.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish contain Ryan Heslop and Ariel Warszawski's Firefly Value Partners, Michael Price's MFP Investors and . In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to Prudential Bancorp, Inc. (NASDAQ:PBIP), around 14.36% of its 13F portfolio. Firefly Value Partners is also relatively very bullish on the stock, setting aside 1.06 percent of its 13F equity portfolio to PBIP.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Prudential Bancorp, Inc. (NASDAQ:PBIP). These stocks are Energy Fuels Inc (NYSE:UUUU), Permian Basin Royalty Trust (NYSE:PBT), Perion Network Ltd (NASDAQ:PERI), and AXT Inc (NASDAQ:AXTI). All of these stocks' market caps are closest to PBIP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UUUU,5,1354,1 PBT,3,1194,-4 PERI,7,21764,1 AXTI,7,10130,-1 Average,5.5,8611,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $26 million in PBIP's case. Perion Network Ltd (NASDAQ:PERI) is the most popular stock in this table. On the other hand Permian Basin Royalty Trust (NYSE:PBT) is the least popular one with only 3 bullish hedge fund positions. Prudential Bancorp, Inc. (NASDAQ:PBIP) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately PBIP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PBIP investors were disappointed as the stock returned -17.4% during the second quarter 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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