Is PRI Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Primerica, Inc. (NYSE:PRI).

Is PRI stock a buy? The best stock pickers were cutting their exposure. The number of bullish hedge fund positions were trimmed by 4 in recent months. Primerica, Inc. (NYSE:PRI) was in 31 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that PRI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x 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. Now let’s take a look at the key hedge fund action encompassing Primerica, Inc. (NYSE:PRI).

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

At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PRI over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Glenn Greenberg’s Brave Warrior Capital has the most valuable position in Primerica, Inc. (NYSE:PRI), worth close to $223.7 million, corresponding to 8.2% of its total 13F portfolio. On Brave Warrior Capital’s heels is William von Mueffling of Cantillon Capital Management, with a $139.8 million position; the fund has 1% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Noam Gottesman’s GLG Partners and John D. Gillespie’s Prospector Partners. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Primerica, Inc. (NYSE:PRI), around 8.23% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, dishing out 1.76 percent of its 13F equity portfolio to PRI.

Since Primerica, Inc. (NYSE:PRI) has witnessed a decline in interest from the smart money, it’s safe to say that there exists a select few fund managers who sold off their positions entirely last quarter. At the top of the heap, Peter Muller’s PDT Partners dropped the biggest investment of all the hedgies watched by Insider Monkey, comprising about $0.5 million in stock, and Peter Seuss’s Prana Capital Management was right behind this move, as the fund dumped about $0.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Primerica, Inc. (NYSE:PRI). These stocks are Iridium Communications Inc. (NASDAQ:IRDM), Everbridge, Inc. (NASDAQ:EVBG), Stifel Financial Corp. (NYSE:SF), Varonis Systems Inc (NASDAQ:VRNS), Manpowergroup Inc (NYSE:MAN), Leslie’s, Inc. (NASDAQ:LESL), and Landstar System, Inc. (NASDAQ:LSTR). All of these stocks’ market caps resemble PRI’s market cap.

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As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $464 million. That figure was $468 million in PRI’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Iridium Communications Inc. (NASDAQ:IRDM) is the least popular one with only 18 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 63.7. 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. 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on PRI as the stock returned 16% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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