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 Piedmont Office Realty Trust, Inc. (NYSE:PDM).
Piedmont Office Realty Trust, Inc. (NYSE:PDM) was in 7 hedge funds' portfolios at the end of the first quarter of 2020. PDM investors should be aware of a decrease in hedge fund sentiment recently. There were 11 hedge funds in our database with PDM holdings at the end of the previous quarter. Our calculations also showed that PDM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are several signals stock traders can use to evaluate publicly traded companies. A pair of the most underrated signals are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite fund managers can outclass the broader indices by a superb margin (see the details here).
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/scorned 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 check out the latest hedge fund action regarding Piedmont Office Realty Trust, Inc. (NYSE:PDM).
How are hedge funds trading Piedmont Office Realty Trust, Inc. (NYSE:PDM)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PDM over the last 18 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, Renaissance Technologies was the largest shareholder of Piedmont Office Realty Trust, Inc. (NYSE:PDM), with a stake worth $42 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $15.2 million. GLG Partners, Citadel Investment Group, and AQR 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 GLG Partners allocated the biggest weight to Piedmont Office Realty Trust, Inc. (NYSE:PDM), around 0.06% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to PDM.
Since Piedmont Office Realty Trust, Inc. (NYSE:PDM) has faced declining sentiment from the smart money, it's safe to say that there was a specific group of hedge funds who sold off their full holdings last quarter. Interestingly, David Harding's Winton Capital Management cut the largest stake of the 750 funds monitored by Insider Monkey, totaling close to $2.8 million in stock. Steve Cohen's fund, Point72 Asset Management, also said goodbye to its stock, about $1.7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Piedmont Office Realty Trust, Inc. (NYSE:PDM) but similarly valued. These stocks are 1Life Healthcare, Inc. (NASDAQ:ONEM), Bank of Hawaii Corporation (NYSE:BOH), National Health Investors Inc (NYSE:NHI), and Independent Bank Corp (NASDAQ:INDB). This group of stocks' market values resemble PDM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ONEM,10,199356,10 BOH,17,75383,1 NHI,13,99642,-2 INDB,4,10050,-10 Average,11,96108,-0.25 [/table]
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $74 million in PDM's case. Bank of Hawaii Corporation (NYSE:BOH) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 4 bullish hedge fund positions. Piedmont Office Realty Trust, Inc. (NYSE:PDM) 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately PDM wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PDM investors were disappointed as the stock returned 5.3% 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.
