Is Primerica, Inc. (PRI) Going to Burn These Hedge Funds?

Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Primerica, Inc. (NYSE:PRI).

Primerica, Inc. (NYSE:PRI) has experienced an increase in activity from the world’s largest hedge funds lately. PRI was in 12 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with PRI positions at the end of the previous quarter. Our calculations also showed that pri isn’t among the 30 most popular stocks among hedge funds.

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 market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

09 Glenn Greenberg

Let’s review the fresh hedge fund action surrounding Primerica, Inc. (NYSE:PRI).

How have hedgies been trading Primerica, Inc. (NYSE:PRI)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in PRI at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with PRI Positions

According to Insider Monkey’s hedge fund database, Glenn Greenberg’s Brave Warrior Capital has the number one position in Primerica, Inc. (NYSE:PRI), worth close to $175.1 million, corresponding to 7.5% of its total 13F portfolio. On Brave Warrior Capital’s heels is William von Mueffling of Cantillon Capital Management, with a $113 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain William von Mueffling’s Cantillon Capital Management, Cliff Asness’s AQR Capital Management and Noam Gottesman’s GLG Partners.

As aggregate interest increased, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in Primerica, Inc. (NYSE:PRI). Millennium Management had $7.5 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $4.1 million position during the quarter. The other funds with brand new PRI positions are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Ken Griffin’s Citadel Investment Group, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Primerica, Inc. (NYSE:PRI) but similarly valued. These stocks are Avnet, Inc. (NASDAQ:AVT), Compania Cervecerias Unidas S.A. (NYSE:CCU), Penumbra Inc (NYSE:PEN), and Ultrapar Participacoes SA (NYSE:UGP). This group of stocks’ market values are closest to PRI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AVT 23 802892 7
CCU 14 100073 3
PEN 25 313000 1
UGP 8 39754 0
Average 17.5 313930 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $314 million. That figure was $467 million in PRI’s case. Penumbra Inc (NYSE:PEN) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 8 bullish hedge fund positions. Primerica, Inc. (NYSE:PRI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PEN might be a better candidate to consider a long position.

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