Here is What Hedge Funds Think About PG&E Corporation (PCG)

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. We at Insider Monkey have plowed through 817 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 September 30th, about a month before the elections. In this article we look at what those investors think of PG&E Corporation (NYSE:PCG).

PG&E Corporation (NYSE:PCG) was in 76 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 92. PCG investors should pay attention to a decrease in hedge fund interest of late. There were 92 hedge funds in our database with PCG positions at the end of the second quarter. Our calculations also showed that PCG isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dan Loeb THIRD POINT

Dan Loeb of Third Point

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. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy 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. 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 website. Keeping this in mind let’s take a glance at the recent hedge fund action encompassing PG&E Corporation (NYSE:PCG).

How have hedgies been trading PG&E Corporation (NYSE:PCG)?

At Q3’s end, a total of 76 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PCG over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Third Point was the largest shareholder of PG&E Corporation (NYSE:PCG), with a stake worth $797.5 million reported as of the end of September. Trailing Third Point was Appaloosa Management LP, which amassed a stake valued at $758.5 million. Zimmer Partners, Anchorage Advisors, and Silver Point Capital 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 Silver Point Capital allocated the biggest weight to PG&E Corporation (NYSE:PCG), around 46.94% of its 13F portfolio. Cyrus Capital Partners is also relatively very bullish on the stock, dishing out 43.63 percent of its 13F equity portfolio to PCG.

Because PG&E Corporation (NYSE:PCG) has faced bearish sentiment from hedge fund managers, we can see that there were a few funds who sold off their full holdings heading into Q4. Intriguingly, Jonathan Barrett and Paul Segal’s Luminus Management cut the largest stake of the 750 funds followed by Insider Monkey, worth about $95.5 million in stock. Steve Cohen’s fund, Point72 Asset Management, also said goodbye to its stock, about $53.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 16 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to PG&E Corporation (NYSE:PCG). These stocks are Ameriprise Financial, Inc. (NYSE:AMP), Keysight Technologies Inc (NYSE:KEYS), Laboratory Corp. of America Holdings (NYSE:LH), MarketAxess Holdings Inc. (NASDAQ:MKTX), Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), Paycom Software Inc (NYSE:PAYC), and Teladoc Health, Inc (NYSE:TDOC). This group of stocks’ market caps resemble PCG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMP 29 618831 1
KEYS 36 364966 -11
LH 57 1749727 5
MKTX 34 941566 1
BBVA 10 104422 -1
PAYC 38 655179 2
TDOC 47 997283 3
Average 35.9 775996 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.9 hedge funds with bullish positions and the average amount invested in these stocks was $776 million. That figure was $6686 million in PCG’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks PG&E Corporation (NYSE:PCG) is more popular among hedge funds. Our overall hedge fund sentiment score for PCG is 63.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on PCG as the stock returned 35.6% since the end of September (through 11/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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