Is Metlife Inc (NYSE:MET) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Metlife Inc a splendid investment now? Investors who are in the know are getting less bullish. The number of long hedge fund positions retreated by 8 recently. MET was in 47 hedge funds’ portfolios at the end of the third quarter of 2015. There were 55 hedge funds in our database with MET holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as National Grid plc (ADR) (NYSE:NGG), Sumitomo Mitsui Financial Grp, Inc. (ADR) (NYSE:SMFG), and Texas Instruments Incorporated (NASDAQ:TXN) to gather more data points.
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According to most traders, hedge funds are viewed as worthless, old financial vehicles of years past. While there are over 8000 funds trading at present, We look at the upper echelon of this group, about 700 funds. It is estimated that this group of investors handle the lion’s share of the smart money’s total asset base, and by following their finest picks, Insider Monkey has formulated a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to review the fresh action surrounding Metlife Inc (NYSE:MET).
How are hedge funds trading Metlife Inc (NYSE:MET)?
At the Q3’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the biggest position in Metlife Inc (NYSE:MET), worth close to $281.7 million, comprising 1.8% of its total 13F portfolio. The second most bullish fund manager is Fir Tree, managed by Jeffrey Tannenbaum, which holds a $226.9 million position; 3.8% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism encompass Mike Masters’ Masters Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’ AQR Capital Management.
Because Metlife Inc (NYSE:MET) has experienced a bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds who sold off their positions entirely heading into Q4. Intriguingly, Andreas Halvorsen’s Viking Global sold off the largest investment of all the hedgies tracked by Insider Monkey, valued at about $659.6 million in call options., and Gordy Holterman and Derek Dunn’s Overland Advisors was right behind this move, as the fund cut about $47.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Metlife Inc (NYSE:MET) but similarly valued. We will take a look at National Grid plc (ADR) (NYSE:NGG), Sumitomo Mitsui Financial Grp, Inc. (ADR) (NYSE:SMFG), Texas Instruments Incorporated (NASDAQ:TXN), and BHP Billiton Limited (ADR) (NYSE:BHP). This group of stocks’ market valuations are similar to MET’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NGG | 6 | 165920 | 1 |
| SMFG | 14 | 35784 | -3 |
| TXN | 35 | 710030 | 2 |
| BHP | 20 | 132412 | 1 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $261 million. That figure was $1.72 billion in MET’s case. Texas Instruments Incorporated (NASDAQ:TXN) is the most popular stock in this table with a total of 35 funds holding long positions, while National Grid plc (ADR) (NYSE:NGG) is the least popular one. Compared to these stocks, Metlife Inc (NYSE:MET) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
