Is PFG Stock A Buy or Sell?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Principal Financial Group Inc (NASDAQ:PFG) based on that data.

Is PFG stock a buy? Principal Financial Group Inc (NASDAQ:PFG) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Principal Financial Group Inc (NASDAQ:PFG) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. There were 25 hedge funds in our database with PFG holdings at the end of September. Our calculations also showed that PFG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

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Do Hedge Funds Think PFG Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in PFG over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in Principal Financial Group Inc (NASDAQ:PFG) was held by Zimmer Partners, which reported holding $24.8 million worth of stock at the end of December. It was followed by Impax Asset Management with a $16 million position. Other investors bullish on the company included Interval Partners, D E Shaw, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Arjuna Capital allocated the biggest weight to Principal Financial Group Inc (NASDAQ:PFG), around 2.08% of its 13F portfolio. Interval Partners is also relatively very bullish on the stock, earmarking 0.59 percent of its 13F equity portfolio to PFG.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Bridgewater Associates, managed by Ray Dalio, initiated the largest position in Principal Financial Group Inc (NASDAQ:PFG). Bridgewater Associates had $2.2 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $1 million position during the quarter. The following funds were also among the new PFG investors: Paul Tudor Jones’s Tudor Investment Corp, Qing Li’s Sciencast Management, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Principal Financial Group Inc (NASDAQ:PFG) but similarly valued. These stocks are Eastman Chemical Company (NYSE:EMN), Discovery Inc. (NASDAQ:DISCA), Crown Holdings, Inc. (NYSE:CCK), Brookfield Property Partners LP (NASDAQ:BPY), Brown & Brown, Inc. (NYSE:BRO), ON Semiconductor Corporation (NASDAQ:ON), and Sarepta Therapeutics Inc (NASDAQ:SRPT). This group of stocks’ market values are similar to PFG’s market value.

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As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $815 million. That figure was $117 million in PFG’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 9 bullish hedge fund positions. Principal Financial Group Inc (NASDAQ:PFG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PFG is 46.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on PFG as the stock returned 28.7% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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