Is PG&E (PCG) Stock A Buy or Sell?

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 fourth 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 5 years and analyze what the smart money thinks of PG&E Corporation (NYSE:PCG) based on that data.

Is PCG stock a buy or sell? PG&E Corporation (NYSE:PCG) was in 66 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 92. PCG has experienced a decrease in enthusiasm from smart money in recent months. There were 76 hedge funds in our database with PCG positions at the end of the third quarter. Our calculations also showed that PCG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

David Tepper of Appaloosa Management LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). With all of this in mind let’s take a look at the key hedge fund action surrounding PG&E Corporation (NYSE:PCG).

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

At Q4’s end, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 50 hedge funds with a bullish position in PCG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

More specifically, Third Point was the largest shareholder of PG&E Corporation (NYSE:PCG), with a stake worth $1058.3 million reported as of the end of December. Trailing Third Point was Zimmer Partners, which amassed a stake valued at $687.5 million. Appaloosa Management LP, Silver Point Capital, and Steadfast Capital Management 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 49.7% of its 13F portfolio. Cyrus Capital Partners is also relatively very bullish on the stock, setting aside 40.17 percent of its 13F equity portfolio to PCG.

Judging by the fact that PG&E Corporation (NYSE:PCG) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that decided to sell off their entire stakes by the end of the fourth quarter. At the top of the heap, Scott Ferguson’s Sachem Head Capital dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $58.7 million in stock, and Nathaniel August’s Mangrove Partners was right behind this move, as the fund sold off about $43.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 10 funds by the end of the fourth quarter.

Let’s check out hedge fund activity in other stocks similar to PG&E Corporation (NYSE:PCG). We will take a look at Verisign, Inc. (NASDAQ:VRSN), Keysight Technologies Inc (NYSE:KEYS), ArcelorMittal (NYSE:MT), Coupa Software Incorporated (NASDAQ:COUP), Yandex NV (NASDAQ:YNDX), Slack Technologies Inc (NYSE:WORK), and Fresenius Medical Care AG & Co. (NYSE:FMS). This group of stocks’ market valuations resemble PCG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRSN 47 6421904 1
KEYS 27 592599 -9
MT 18 511254 -2
COUP 62 4125119 12
YNDX 34 1623779 1
WORK 66 3977861 46
FMS 9 15599 0
Average 37.6 2466874 7

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $2467 million. That figure was $6652 million in PCG’s case. Slack Technologies Inc (NYSE:WORK) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 9 bullish hedge fund positions. PG&E Corporation (NYSE:PCG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PCG is 66.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately PCG wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PCG were disappointed as the stock returned -7.6% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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