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Hedge Fund Darlings vs. PPL Corporation (PPL) In 2019

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards PPL Corporation (NYSE:PPL).

PPL Corporation (NYSE:PPL) was in 24 hedge funds’ portfolios at the end of September. PPL investors should pay attention to an increase in enthusiasm from smart money lately. There were 20 hedge funds in our database with PPL positions at the end of the previous quarter. Our calculations also showed that PPL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

If you’d ask most stock holders, hedge funds are seen as underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our researchers choose to focus on the masters of this club, approximately 750 funds. Most estimates calculate that this group of people preside over the majority of the smart money’s total capital, and by observing their best picks, Insider Monkey has unearthed numerous investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Phill Gross of Adage Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now we’re going to take a gander at the recent hedge fund action surrounding PPL Corporation (NYSE:PPL).

Hedge fund activity in PPL Corporation (NYSE:PPL)

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the second quarter of 2019. On the other hand, there were a total of 24 hedge funds with a bullish position in PPL a year ago. So, let’s find out 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 PPL Corporation (NYSE:PPL), with a stake worth $180.6 million reported as of the end of September. Trailing Renaissance Technologies was Zimmer Partners, which amassed a stake valued at $132.7 million. D E Shaw, AQR Capital Management, and Adage 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 Covalis Capital allocated the biggest weight to PPL Corporation (NYSE:PPL), around 29.91% of its 13F portfolio. Blackstart Capital is also relatively very bullish on the stock, dishing out 3.32 percent of its 13F equity portfolio to PPL.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the biggest call position in PPL Corporation (NYSE:PPL). Millennium Management had $15.8 million invested in the company at the end of the quarter. Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital also initiated a $6.3 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PPL Corporation (NYSE:PPL) but similarly valued. These stocks are United Airlines Holdings, Inc. (NASDAQ:UAL), Royal Caribbean Cruises Ltd. (NYSE:RCL), KKR & Co Inc. (NYSE:KKR), and Synchrony Financial (NYSE:SYF). This group of stocks’ market valuations are closest to PPL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UAL 46 7090686 -1
RCL 45 1672773 -1
KKR 41 3227093 5
SYF 43 2375436 -3
Average 43.75 3591497 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.75 hedge funds with bullish positions and the average amount invested in these stocks was $3591 million. That figure was $516 million in PPL’s case. United Airlines Holdings, Inc. (NASDAQ:UAL) is the most popular stock in this table. On the other hand KKR & Co Inc. (NYSE:KKR) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks PPL Corporation (NYSE:PPL) is even less popular than KKR. 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 10.1 percentage points. A small number of hedge funds were also right about betting on PPL, though not to the same extent, as the stock returned 33.4% in 2019 and outperformed the market as well.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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