The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Prudential Financial Inc (NYSE:PRU).
Is PRU a good stock to buy? Prudential Financial Inc (NYSE:PRU) was in 34 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 39. PRU has experienced an increase in support from the world’s most elite money managers recently. There were 26 hedge funds in our database with PRU holdings at the end of June. Our calculations also showed that PRU 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 leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Prudential Financial Inc (NYSE:PRU).
Do Hedge Funds Think PRU Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from one quarter earlier. By comparison, 30 hedge funds held shares or bullish call options in PRU a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the biggest position in Prudential Financial Inc (NYSE:PRU), worth close to $262.2 million, comprising 0.4% of its total 13F portfolio. Coming in second is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $41.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Ken Griffin’s Citadel Investment Group, Dmitry Balyasny’s Balyasny Asset Management and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Pittencrieff Partners – Gabalex Capital allocated the biggest weight to Prudential Financial Inc (NYSE:PRU), around 1.33% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, setting aside 1.22 percent of its 13F equity portfolio to PRU.
Now, key money managers were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, assembled the largest position in Prudential Financial Inc (NYSE:PRU). Laurion Capital Management had $3.6 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also initiated a $3.4 million position during the quarter. The following funds were also among the new PRU investors: Parvinder Thiara’s Athanor Capital, Qing Li’s Sciencast Management, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Prudential Financial Inc (NYSE:PRU) but similarly valued. These stocks are Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Pinterest, Inc. (NYSE:PINS), ResMed Inc. (NYSE:RMD), Tencent Music Entertainment Group (NYSE:TME), Aptiv PLC (NYSE:APTV), Fiat Chrysler Automobiles NV (NYSE:FCAU), and Corning Incorporated (NYSE:GLW). All of these stocks’ market caps match PRU’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 41.6 hedge funds with bullish positions and the average amount invested in these stocks was $1427 million. That figure was $479 million in PRU’s case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand Fiat Chrysler Automobiles NV (NYSE:FCAU) is the least popular one with only 20 bullish hedge fund positions. Prudential Financial Inc (NYSE:PRU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PRU is 47.8. 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. A small number of hedge funds were also right about betting on PRU as the stock returned 22.2% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.