It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Primerica, Inc. (NYSE:PRI).
Primerica, Inc. (NYSE:PRI) was in 15 hedge funds’ portfolios at the end of September. PRI has experienced a decrease in enthusiasm from smart money lately. There were 18 hedge funds in our database with PRI positions at the end of the previous quarter. At the end of this article we will also compare PRI to other stocks including Banco Macro SA (ADR) (NYSE:BMA), Companhia Energetica Minas Gerais (ADR) (NYSE:CIG), and Bloomin’ Brands Inc (NASDAQ:BLMN) to get a better sense of its popularity.
Follow Primerica Inc. (NYSE:PRI)
Follow Primerica Inc. (NYSE:PRI)
Keeping this in mind, let’s take a glance at the recent action regarding Primerica, Inc. (NYSE:PRI).
Hedge fund activity in Primerica, Inc. (NYSE:PRI)
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Glenn Greenberg’s Brave Warrior Capital has the largest position in Primerica, Inc. (NYSE:PRI), worth close to $140 million, corresponding to 4.4% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds an $42.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management and Richard S. Pzena’s Pzena Investment Management.
Because Primerica, Inc. (NYSE:PRI) has faced falling interest from the smart money, logic holds that there were a few hedgies that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Robert Jaffe’s Force Capital dropped the largest stake of all the hedgies monitored by Insider Monkey, valued at close to $16.4 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also cut its stock, about $10.9 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Primerica, Inc. (NYSE:PRI). These stocks are Banco Macro SA (ADR) (NYSE:BMA), Companhia Energetica Minas Gerais (ADR) (NYSE:CIG), Bloomin’ Brands Inc (NASDAQ:BLMN), and MicroStrategy Incorporated (NASDAQ:MSTR). All of these stocks’ market caps match PRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMA | 13 | 66701 | -1 |
| CIG | 11 | 24330 | 0 |
| BLMN | 30 | 408066 | -5 |
| MSTR | 27 | 524689 | -1 |
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $266 million in PRI’s case. Bloomin’ Brands Inc (NASDAQ:BLMN) is the most popular stock in this table. On the other hand Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) is the least popular one with only 11 bullish hedge fund positions. Primerica, Inc. (NYSE:PRI) 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. In this regard BLMN might be a better candidate to consider a long position.
