The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Prologis Inc (NYSE:PLD) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Prologis Inc (NYSE:PLD) was in 35 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 40. PLD has experienced a decrease in hedge fund interest recently. There were 40 hedge funds in our database with PLD holdings at the end of March. Our calculations also showed that PLD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jeffrey Talpins of Element Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a gander at the latest hedge fund action regarding Prologis Inc (NYSE:PLD).
Hedge fund activity in Prologis Inc (NYSE:PLD)
At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in PLD 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.
Among these funds, AQR Capital Management held the most valuable stake in Prologis Inc (NYSE:PLD), which was worth $83.5 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $79.9 million worth of shares. Millennium Management, Renaissance Technologies, and Citadel Investment Group 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 Third Avenue Management allocated the biggest weight to Prologis Inc (NYSE:PLD), around 4.77% of its 13F portfolio. Bourgeon Capital is also relatively very bullish on the stock, setting aside 1.59 percent of its 13F equity portfolio to PLD.
Due to the fact that Prologis Inc (NYSE:PLD) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their entire stakes in the second quarter. Interestingly, Josh Donfeld and David Rogers’s Castle Hook Partners dropped the largest investment of all the hedgies monitored by Insider Monkey, valued at an estimated $38 million in stock. Jonathan Litt’s fund, Land & Buildings Investment Management, also sold off its stock, about $25.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds in the second quarter.
Let’s go over hedge fund activity in other stocks similar to Prologis Inc (NYSE:PLD). These stocks are Caterpillar Inc. (NYSE:CAT), Dominion Energy Inc. (NYSE:D), The Goldman Sachs Group, Inc. (NYSE:GS), The Estee Lauder Companies Inc (NYSE:EL), The Blackstone Group Inc. (NYSE:BX), Stryker Corporation (NYSE:SYK), and Intuitive Surgical, Inc. (NASDAQ:ISRG). This group of stocks’ market valuations match PLD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAT | 39 | 2667687 | 5 |
| D | 33 | 366229 | -1 |
| GS | 69 | 3543027 | -5 |
| EL | 46 | 1197830 | 2 |
| BX | 47 | 1434341 | -2 |
| SYK | 50 | 1257094 | 2 |
| ISRG | 43 | 1094503 | -7 |
| Average | 46.7 | 1651530 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.7 hedge funds with bullish positions and the average amount invested in these stocks was $1652 million. That figure was $433 million in PLD’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand Dominion Energy Inc. (NYSE:D) is the least popular one with only 33 bullish hedge fund positions. Prologis Inc (NYSE:PLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLD is 29. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately PLD wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PLD investors were disappointed as the stock returned 9.1% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
