At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Primerica, Inc. (NYSE:PRI) makes for a good investment right now.
Is PRI a good stock to buy now? Primerica, Inc. (NYSE:PRI) was in 35 hedge funds’ portfolios at the end of September. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PRI has seen an increase in hedge fund interest of late. There were 25 hedge funds in our database with PRI positions at the end of the second quarter. Our calculations also showed that PRI 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 take a peek at the fresh hedge fund action surrounding Primerica, Inc. (NYSE:PRI).
Do Hedge Funds Think PRI Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in PRI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Primerica, Inc. (NYSE:PRI) was held by Brave Warrior Capital, which reported holding $189.3 million worth of stock at the end of September. It was followed by Cantillon Capital Management with a $119.3 million position. Other investors bullish on the company included GLG Partners, Arrowstreet Capital, and Brant Point Investment Management. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Primerica, Inc. (NYSE:PRI), around 8.45% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, dishing out 1.67 percent of its 13F equity portfolio to PRI.
Now, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Primerica, Inc. (NYSE:PRI). Arrowstreet Capital had $15.5 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also made a $4 million investment in the stock during the quarter. The following funds were also among the new PRI investors: Dmitry Balyasny’s Balyasny Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Parvinder Thiara’s Athanor Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Primerica, Inc. (NYSE:PRI) but similarly valued. We will take a look at ICL Group Ltd. (NYSE:ICL), Asana Inc. (NYSE:ASAN), Signature Bank (NASDAQ:SBNY), Virtu Financial Inc (NASDAQ:VIRT), Haemonetics Corporation (NYSE:HAE), Change Healthcare Inc. (NASDAQ:CHNG), and Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR). This group of stocks’ market caps are closest to PRI’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 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $435 million. That figure was $437 million in PRI’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 5 bullish hedge fund positions. Primerica, Inc. (NYSE:PRI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRI is 74.1. 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 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on PRI as the stock returned 20.4% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.