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Is Pearson PLC (ADR) (PSO) A Good Stock To Buy?

Judging by the fact that Pearson PLC (ADR) (NYSE:PSO) has weathered bearish sentiment from hedge fund managers, we can see that there exists a select few hedgies who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that D. E. Shaw’s D E Shaw dumped the biggest investment of the “upper crust” of funds studied by Insider Monkey, worth an estimated $1.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $0.3 million worth.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pearson PLC (ADR) (NYSE:PSO) but similarly valued. These stocks are E TRADE Financial Corporation (NASDAQ:ETFC), Everest Re Group Ltd (NYSE:RE), Msci Inc (NYSE:MSCI), and Michael Kors Holdings Ltd (NYSE:KORS). This group of stocks’ market caps are closest to PSO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ETFC 34 1081614 -1
RE 18 656448 -4
MSCI 24 349907 1
KORS 31 583806 2

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $668 million. That figure was $35 million in PSO’s case. E TRADE Financial Corporation (NASDAQ:ETFC) is the most popular stock in this table. On the other hand Everest Re Group Ltd (NYSE:RE) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Pearson PLC (ADR) (NYSE:PSO) is even less popular than RE. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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Disclosure: None

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