Is PPL Corporation (NYSE:PPL) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is PPL Corporation (NYSE:PPL) a healthy stock for your portfolio? The smart money is becoming less hopeful. The number of long hedge fund positions shrunk by 1 in recent months. Our calculations also showed that PPL isn’t among the 30 most popular stocks among hedge funds. PPL was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 24 hedge funds in our database with PPL positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the fresh hedge fund action surrounding PPL Corporation (NYSE:PPL).
What have hedge funds been doing with PPL Corporation (NYSE:PPL)?
At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PPL over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PPL Corporation (NYSE:PPL) was held by Zimmer Partners, which reported holding $588.4 million worth of stock at the end of September. It was followed by Millennium Management with a $51.6 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and Citadel Investment Group.
Judging by the fact that PPL Corporation (NYSE:PPL) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that elected to cut their entire stakes heading into Q3. Intriguingly, Jonathan Barrett and Paul Segal’s Luminus Management dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $72.7 million in stock, and Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital was right behind this move, as the fund sold off about $23.5 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to PPL Corporation (NYSE:PPL). These stocks are Telefonica Brasil SA (NYSE:VIV), M&T Bank Corporation (NYSE:MTB), DTE Energy Company (NYSE:DTE), and Sun Life Financial Inc. (NYSE:SLF). This group of stocks’ market values match PPL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VIV | 12 | 151235 | -1 |
| MTB | 42 | 1495917 | 1 |
| DTE | 23 | 561927 | -2 |
| SLF | 10 | 83989 | -3 |
| Average | 21.75 | 573267 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $573 million. That figure was $798 million in PPL’s case. M&T Bank Corporation (NYSE:MTB) is the most popular stock in this table. On the other hand Sun Life Financial Inc. (NYSE:SLF) is the least popular one with only 10 bullish hedge fund positions. PPL Corporation (NYSE:PPL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on PPL, though not to the same extent, as the stock returned 17.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
