Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about T. Rowe Price Group, Inc. (NASDAQ:TROW) in this article.
Is TROW a good stock to buy? Hedge fund interest in T. Rowe Price Group, Inc. (NASDAQ:TROW) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TROW 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). 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 Trane Technologies plc (NYSE:TT), PPG Industries, Inc. (NYSE:PPG), and Best Buy Co., Inc. (NYSE:BBY) to gather more data points.
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 let’s analyze the latest hedge fund action surrounding T. Rowe Price Group, Inc. (NASDAQ:TROW).
Do Hedge Funds Think TROW Is A Good Stock To Buy Now?
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TROW over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in T. Rowe Price Group, Inc. (NASDAQ:TROW), which was worth $108.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $48.7 million worth of shares. Markel Gayner Asset Management, Citadel Investment Group, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Quantamental Technologies allocated the biggest weight to T. Rowe Price Group, Inc. (NASDAQ:TROW), around 1.29% of its 13F portfolio. Prana Capital Management is also relatively very bullish on the stock, designating 1.09 percent of its 13F equity portfolio to TROW.
Since T. Rowe Price Group, Inc. (NASDAQ:TROW) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of fund managers who sold off their full holdings heading into Q4. Interestingly, James Parsons’s Junto Capital Management sold off the biggest position of all the hedgies followed by Insider Monkey, worth an estimated $49 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $17.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as T. Rowe Price Group, Inc. (NASDAQ:TROW) but similarly valued. These stocks are Trane Technologies plc (NYSE:TT), PPG Industries, Inc. (NYSE:PPG), Best Buy Co., Inc. (NYSE:BBY), Match Group, Inc. (NASDAQ:MTCH), Paychex, Inc. (NASDAQ:PAYX), Peloton Interactive, Inc. (NASDAQ:PTON), and Eversource Energy (NYSE:ES). This group of stocks’ market valuations match TROW’s market valuation.
|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 40 hedge funds with bullish positions and the average amount invested in these stocks was $1376 million. That figure was $348 million in TROW’s case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Eversource Energy (NYSE:ES) is the least popular one with only 20 bullish hedge fund positions. T. Rowe Price Group, Inc. (NASDAQ:TROW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TROW is 52.1. 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. A small number of hedge funds were also right about betting on TROW as the stock returned 18% 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.