While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding PLDT Inc. (NYSE:PHI).
Is PHI a good stock to buy now? PLDT Inc. (NYSE:PHI) shareholders have witnessed an increase in hedge fund interest in recent months. PLDT Inc. (NYSE:PHI) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 5 hedge funds in our database with PHI positions at the end of the second quarter. Our calculations also showed that PHI 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.
Today there are numerous signals market participants put to use to size up stocks. A couple of the most under-the-radar signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the S&P 500 by a significant amount (see the details here).
At Insider Monkey we scour multiple sources to uncover 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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind we’re going to review the new hedge fund action encompassing PLDT Inc. (NYSE:PHI).
What does smart money think about PLDT Inc. (NYSE:PHI)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PHI over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in PLDT Inc. (NYSE:PHI) was held by Renaissance Technologies, which reported holding $91.5 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $1.5 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to PLDT Inc. (NYSE:PHI), around 0.09% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to PHI.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), created the biggest position in PLDT Inc. (NYSE:PHI). Schonfeld Strategic Advisors had $0.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new PHI position is 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 PLDT Inc. (NYSE:PHI) but similarly valued. These stocks are Darling Ingredients Inc. (NYSE:DAR), Inphi Corporation (NASDAQ:IPHI), Post Holdings Inc (NYSE:POST), Tenaris S.A. (NYSE:TS), Aluminum Corp. of China Limited (NYSE:ACH), Ares Management Corp (NYSE:ARES), and Polaris Inc. (NYSE:PII). All of these stocks’ market caps are closest to PHI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $467 million. That figure was $96 million in PHI’s case. Polaris Inc. (NYSE:PII) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 4 bullish hedge fund positions. PLDT Inc. (NYSE:PHI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PHI is 43.7. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately PHI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PHI investors were disappointed as the stock returned 6.5% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.