Hedge Funds Aren’t Done Buying Prologis Inc (PLD)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Prologis Inc (NYSE:PLD).

Prologis Inc (NYSE:PLD) has seen an increase in activity from the world’s largest hedge funds in recent months. PLD was in 40 hedge funds’ portfolios at the end of March. There were 35 hedge funds in our database with PLD positions at the end of the previous quarter. Our calculations also showed that PLD isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the eyes of most shareholders, hedge funds are seen as worthless, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, Our researchers look at the moguls of this club, approximately 850 funds. Most estimates calculate that this group of people have their hands on the majority of the hedge fund industry’s total asset base, and by tailing their inimitable stock picks, Insider Monkey has found numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a gander at the recent hedge fund action surrounding Prologis Inc (NYSE:PLD).

How are hedge funds trading Prologis Inc (NYSE:PLD)?

At Q1’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in PLD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Prologis Inc (NYSE:PLD) was held by AQR Capital Management, which reported holding $68.1 million worth of stock at the end of September. It was followed by Adage Capital Management with a $67.7 million position. Other investors bullish on the company included Millennium Management, Castle Hook Partners, and Third Avenue Management. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to Prologis Inc (NYSE:PLD), around 10.76% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, setting aside 10.41 percent of its 13F equity portfolio to PLD.

As industrywide interest jumped, key hedge funds have jumped into Prologis Inc (NYSE:PLD) headfirst. Castle Hook Partners, managed by Josh Donfeld and David Rogers, assembled the largest position in Prologis Inc (NYSE:PLD). Castle Hook Partners had $38 million invested in the company at the end of the quarter. Martin Whitman’s Third Avenue Management also made a $29.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Jonathan Litt’s Land & Buildings Investment Management, Steve Cohen’s Point72 Asset Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now review hedge fund activity in other stocks similar to Prologis Inc (NYSE:PLD). These stocks are Duke Energy Corporation (NYSE:DUK), JD.Com Inc (NASDAQ:JD), Automatic Data Processing, Inc. (NASDAQ:ADP), and Enbridge Inc (NYSE:ENB). This group of stocks’ market values match PLD’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DUK 35 1573551 -2
JD 90 7919916 27
ADP 46 1444924 -5
ENB 25 297504 4
Average 49 2808974 6

View table here if you experience formatting issues.

As you can see these stocks had an average of 49 hedge funds with bullish positions and the average amount invested in these stocks was $2809 million. That figure was $451 million in PLD’s case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Enbridge Inc (NYSE:ENB) is the least popular one with only 25 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. 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 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 13.8% during the second quarter 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.