Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Are Warming Up To Metlife Inc (MET)

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Metlife Inc (NYSE:MET) undervalued? The best stock pickers are turning bullish. The number of long hedge fund positions moved up by 9 in recent months. Our calculations also showed that MET isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open today, We hone in on the moguls of this club, about 750 funds. These investment experts watch over the majority of all hedge funds’ total capital, and by monitoring their top equity investments, Insider Monkey has discovered numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually 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 .

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the recent hedge fund action regarding Metlife Inc (NYSE:MET).

How have hedgies been trading Metlife Inc (NYSE:MET)?

At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in MET a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

MET_dec2019

Among these funds, Diamond Hill Capital held the most valuable stake in Metlife Inc (NYSE:MET), which was worth $471.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $323.7 million worth of shares. Pzena Investment Management, Arrowstreet Capital, and Millennium 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 Diamond Hill Capital allocated the biggest weight to Metlife Inc (NYSE:MET), around 2.51% of its portfolio. Pzena Investment Management is also relatively very bullish on the stock, setting aside 1.59 percent of its 13F equity portfolio to MET.

Now, some big names have jumped into Metlife Inc (NYSE:MET) headfirst. Paloma Partners, managed by Donald Sussman, established the largest position in Metlife Inc (NYSE:MET). Paloma Partners had $50.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $49.7 million position during the quarter. The following funds were also among the new MET investors: Michael Gelband’s ExodusPoint Capital, Renaissance Technologies, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Metlife Inc (NYSE:MET) but similarly valued. These stocks are BCE Inc. (NYSE:BCE), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Tesla Inc. (NASDAQ:TSLA), and EOG Resources Inc (NYSE:EOG). This group of stocks’ market caps resemble MET’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BCE 13 415810 -1
VRTX 46 2296101 6
TSLA 28 570594 -9
EOG 48 1449930 12
Average 33.75 1183109 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $1183 million. That figure was $2050 million in MET’s case. EOG Resources Inc (NYSE:EOG) is the most popular stock in this table. On the other hand BCE Inc. (NYSE:BCE) is the least popular one with only 13 bullish hedge fund positions. Metlife Inc (NYSE:MET) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MET, though not to the same extent, as the stock returned 6.8% during the first two months of the fourth quarter and outperformed the market as well.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.