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Is T. Rowe Price Group Inc (TROW) A Good Stock to Own?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards T. Rowe Price Group Inc (NASDAQ:TROW).

T. Rowe Price Group Inc (NASDAQ:TROW) was in 28 hedge funds’ portfolios at the end of the third quarter of 2016. TROW has seen an increase in hedge fund interest of late. There were 23 hedge funds in our database with TROW holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sprint Nextel Corporation (NYSE:S), Dr Pepper Snapple Group Inc. (NYSE:DPS), and The Clorox Company (NYSE:CLX) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about T. Rowe Price Group Inc (NASDAQ:TROW)?

Heading into the fourth quarter of 2016, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 22% bump from one quarter earlier. That pushed the stock back to its highest level of hedge fund ownership in the last five quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
trow
Of the funds tracked by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in T. Rowe Price Group Inc (NASDAQ:TROW). Generation Investment Management has a $258.2 million position in the stock, comprising 2.8% of its 13F portfolio. Sitting at the No. 2 spot is Robert Joseph Caruso of Select Equity Group, with a $38.6 million position. Remaining hedge funds and institutional investors with similar optimism consist of Israel Englander’s Millennium Management, Jim Simons’ Renaissance Technologies and David Harding’s Winton Capital Management.

As one would reasonably expect, some big names were breaking ground themselves. Millennium Management assembled the biggest position in T. Rowe Price Group Inc (NASDAQ:TROW). Millennium Management had $38.3 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $6.5 million investment in the stock during the quarter. The following funds were also among the new TROW investors: Ken Griffin’s Citadel Investment Group, Matthew Tewksbury’s Stevens Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s now review hedge fund activity in other stocks similar to T. Rowe Price Group Inc (NASDAQ:TROW). We will take a look at Sprint Nextel Corporation (NYSE:S), Dr Pepper Snapple Group Inc. (NYSE:DPS), The Clorox Company (NYSE:CLX), and DTE Energy Co (NYSE:DTE). All of these stocks’ market caps match TROW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
S 29 331367 9
DPS 32 1865502 -2
CLX 25 771295 -1
DTE 20 533875 5

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $876 million. That figure was $534 million in TROW’s case. Dr Pepper Snapple Group Inc. (NYSE:DPS) is the most popular stock in this table. On the other hand DTE Energy Co (NYSE:DTE) is the least popular one with only 20 bullish hedge fund positions. T. Rowe Price Group Inc (NASDAQ:TROW) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on recently. In this regard Sprint might be a better candidate to consider a long position in.

Disclosure: None

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