Do Hedge Funds Love Pitney Bowes Inc. (PBI)?

·6 min read

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article we look at what those investors think of Pitney Bowes Inc. (NYSE:PBI).

Pitney Bowes Inc. (NYSE:PBI) shareholders have witnessed an increase in support from the world's most elite money managers lately. Pitney Bowes Inc. (NYSE:PBI) was in 23 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that PBI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jamie Zimmerman of Litespeed Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to check out the key hedge fund action encompassing Pitney Bowes Inc. (NYSE:PBI).

Do Hedge Funds Think PBI Is A Good Stock To Buy Now?

At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the first quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in PBI a year ago. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Chuck Royce's Royce & Associates has the biggest position in Pitney Bowes Inc. (NYSE:PBI), worth close to $20.6 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $18.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions comprise Mike Masters's Masters Capital Management, Anand Parekh's Alyeska Investment Group and Jamie Zimmerman's Litespeed Management. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to Pitney Bowes Inc. (NYSE:PBI), around 14.89% of its 13F portfolio. Nierenberg Investment Management is also relatively very bullish on the stock, designating 1.52 percent of its 13F equity portfolio to PBI.

Consequently, key money managers were leading the bulls' herd. Holocene Advisors, managed by Brandon Haley, assembled the largest position in Pitney Bowes Inc. (NYSE:PBI). Holocene Advisors had $0.4 million invested in the company at the end of the quarter. Mika Toikka's AlphaCrest Capital Management also made a $0.2 million investment in the stock during the quarter. The other funds with brand new PBI positions are Noam Gottesman's GLG Partners, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and David Nierenberg's Nierenberg Investment Management.

Let's check out hedge fund activity in other stocks similar to Pitney Bowes Inc. (NYSE:PBI). We will take a look at PMV Pharmaceuticals, Inc. (NASDAQ:PMVP), Materion Corp (NYSE:MTRN), Marcus & Millichap Inc (NYSE:MMI), NeoGames S.A. (NASDAQ:NGMS), Sandstorm Gold Ltd. (NYSE:SAND), TTM Technologies, Inc. (NASDAQ:TTMI), and Dine Brands Global, Inc. (NYSE:DIN). This group of stocks' market valuations resemble PBI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PMVP,18,706738,-3 MTRN,15,93666,-2 MMI,11,79302,-3 NGMS,11,63227,2 SAND,16,126280,1 TTMI,19,134778,-2 DIN,28,218107,0 Average,16.9,203157,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $126 million in PBI's case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand Marcus & Millichap Inc (NYSE:MMI) is the least popular one with only 11 bullish hedge fund positions. Pitney Bowes Inc. (NYSE:PBI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PBI is 66.9. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately PBI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PBI were disappointed as the stock returned -18.5% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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