In this article we will analyze whether Points International Ltd (NASDAQ:PCOM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Points International (PCOM) a good stock to buy now? Hedge funds were getting less optimistic. The number of bullish hedge fund positions went down by 2 recently. Points International Ltd (NASDAQ:PCOM) was in 7 hedge funds' portfolios at the end of September. The all time high for this statistics is 10. Our calculations also showed that PCOM 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). There were 9 hedge funds in our database with PCOM positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a lot of signals investors use to size up their stock investments. A pair of the most under-the-radar signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best money managers can trounce the broader indices by a healthy amount (see the details here).
Fred DiSanto Ancora Advisors
Fred DiSanto of Ancora Advisors
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. Keeping this in mind let's take a peek at the recent hedge fund action encompassing Points International Ltd (NASDAQ:PCOM).
What have hedge funds been doing with Points International Ltd (NASDAQ:PCOM)?
At Q3's end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in PCOM a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Is PCOM A Good Stock To Buy?
The largest stake in Points International Ltd (NASDAQ:PCOM) was held by Harspring Capital Management, which reported holding $9.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7.2 million position. Other investors bullish on the company included Galibier Capital Management, Arrowstreet Capital, and Ancora Advisors. In terms of the portfolio weights assigned to each position Harspring Capital Management allocated the biggest weight to Points International Ltd (NASDAQ:PCOM), around 2.71% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, dishing out 0.33 percent of its 13F equity portfolio to PCOM.
Because Points International Ltd (NASDAQ:PCOM) has witnessed declining sentiment from the smart money, we can see that there lies a certain "tier" of fund managers who were dropping their entire stakes last quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest position of the "upper crust" of funds monitored by Insider Monkey, comprising close to $0.3 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $0.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Points International Ltd (NASDAQ:PCOM). We will take a look at Entravision Communications Corporation (NYSE:EVC), StoneCastle Financial Corp (NASDAQ:BANX), DarioHealth Corp. (NASDAQ:DRIO), Spark Networks SE (NYSE:LOV), Graham Corporation (NYSE:GHM), Resonant Inc. (NASDAQ:RESN), and Community Financial Corp (NASDAQ:TCFC). This group of stocks' market values resemble PCOM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVC,9,15700,-1 BANX,1,252,0 DRIO,3,10982,1 LOV,6,29375,1 GHM,9,19016,1 RESN,5,6733,0 TCFC,3,15975,0 Average,5.1,14005,0.3 [/table]
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $20 million in PCOM's case. Entravision Communications Corporation (NYSE:EVC) is the most popular stock in this table. On the other hand StoneCastle Financial Corp (NASDAQ:BANX) is the least popular one with only 1 bullish hedge fund positions. Points International Ltd (NASDAQ:PCOM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PCOM is 61.5. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on PCOM as the stock returned 26.8% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
