Hedge Funds Are Selling Metlife Inc (MET)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Metlife Inc (NYSE:MET) based on those filings.

Metlife Inc (NYSE:MET) has experienced a decrease in activity from the world’s largest hedge funds lately. Metlife Inc (NYSE:MET) was in 32 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that MET isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Robert Atchinson of Adage Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to review the latest hedge fund action regarding Metlife Inc (NYSE:MET).

Do Hedge Funds Think MET Is A Good Stock To Buy Now?

At the end of March, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in MET a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Metlife Inc (NYSE:MET) was held by Pzena Investment Management, which reported holding $314.5 million worth of stock at the end of December. It was followed by Diamond Hill Capital with a $288.4 million position. Other investors bullish on the company included Viking Global, Citadel Investment Group, and Adage Capital Management. In terms of the portfolio weights assigned to each position CSat Investment Advisory allocated the biggest weight to Metlife Inc (NYSE:MET), around 1.95% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, setting aside 1.28 percent of its 13F equity portfolio to MET.

Since Metlife Inc (NYSE:MET) has experienced a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies who sold off their full holdings last quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth about $25.7 million in stock, and Jonathan Kolatch’s Redwood Capital Management was right behind this move, as the fund sold off about $12.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s now review 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 Atlassian Corporation Plc (NASDAQ:TEAM), Southern Copper Corporation (NYSE:SCCO), The Blackstone Group Inc. (NYSE:BX), Moderna, Inc. (NASDAQ:MRNA), Edwards Lifesciences Corporation (NYSE:EW), Honda Motor Co Ltd (NYSE:HMC), and Vodafone Group Plc (NASDAQ:VOD). All of these stocks’ market caps resemble MET’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TEAM 67 3955751 -2
SCCO 27 589771 4
BX 49 1626408 -5
MRNA 39 1640099 -2
EW 36 1462451 -2
HMC 12 432850 0
VOD 17 775060 0
Average 35.3 1497484 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $1497 million. That figure was $1147 million in MET’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Honda Motor Co Ltd (NYSE:HMC) is the least popular one with only 12 bullish hedge fund positions. Metlife Inc (NYSE:MET) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MET is 37.4. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately MET wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MET investors were disappointed as the stock returned 0.1% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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