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Hedge Funds Cautiously Watching PLDT Inc. (PHI)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of PLDT Inc. (NYSE:PHI) based on that data.

PLDT Inc. (NYSE:PHI) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as IDACORP Inc (NYSE:IDA), Store Capital Corporation (NYSE:STOR), and Stericycle Inc (NASDAQ:SRCL) to gather more data points. Our calculations also showed that PHI 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

Jim Simons Founder of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let’s take a glance at the recent hedge fund action encompassing PLDT Inc. (NYSE:PHI).

Hedge fund activity in PLDT Inc. (NYSE:PHI)

Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in PHI a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in PLDT Inc. (NYSE:PHI) was held by Renaissance Technologies, which reported holding $67 million worth of stock at the end of September. It was followed by Millennium Management with a $2.1 million position. Other investors bullish on the company included Marshall Wace LLP, D E Shaw, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to PLDT Inc. (NYSE:PHI), around 0.07% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to PHI.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the first quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to PLDT Inc. (NYSE:PHI). These stocks are IDACORP Inc (NYSE:IDA), Store Capital Corporation (NYSE:STOR), Stericycle Inc (NASDAQ:SRCL), and Life Storage, Inc. (NYSE:LSI). This group of stocks’ market values match PHI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IDA 24 282100 0
STOR 25 443966 5
SRCL 20 571854 -4
LSI 22 155858 2
Average 22.75 363445 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $363 million. That figure was $74 million in PHI’s case. Store Capital Corporation (NYSE:STOR) is the most popular stock in this table. On the other hand Stericycle Inc (NASDAQ:SRCL) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks PLDT Inc. (NYSE:PHI) is even less popular than SRCL. Hedge funds dodged a bullet by taking a bearish stance towards PHI. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately PHI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); PHI investors were disappointed as the stock returned 20.3% during the second quarter (through June 10th) 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 so far in 2020.

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