We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards T. Rowe Price Group, Inc. (NASDAQ:TROW).
Is TROW stock a buy or sell? T. Rowe Price Group, Inc. (NASDAQ:TROW) was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TROW investors should be aware of an increase in enthusiasm from smart money in recent months. There were 34 hedge funds in our database with TROW holdings at the end of September. Our calculations also showed that TROW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 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 10 best battery stocks to buy 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 analyze the key hedge fund action encompassing T. Rowe Price Group, Inc. (NASDAQ:TROW).
Do Hedge Funds Think TROW Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the third quarter of 2020. On the other hand, there were a total of 27 hedge funds with a bullish position in TROW a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in T. Rowe Price Group, Inc. (NASDAQ:TROW) was held by AQR Capital Management, which reported holding $115.4 million worth of stock at the end of December. It was followed by Markel Gayner Asset Management with a $47.5 million position. Other investors bullish on the company included Schonfeld Strategic Advisors, Millennium Management, and Renaissance Technologies. 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 1.72% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, setting aside 0.75 percent of its 13F equity portfolio to TROW.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in T. Rowe Price Group, Inc. (NASDAQ:TROW). Balyasny Asset Management had $12.2 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $5 million investment in the stock during the quarter. The other funds with brand new TROW positions are Anand Parekh’s Alyeska Investment Group, Greg Eisner’s Engineers Gate Manager, and Michael Gelband’s ExodusPoint Capital.
Let’s check out 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 Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), PPG Industries, Inc. (NYSE:PPG), RingCentral Inc (NYSE:RNG), Verisk Analytics, Inc. (NASDAQ:VRSK), Johnson Controls International plc (NYSE:JCI), TransDigm Group Incorporated (NYSE:TDG), and Cummins Inc. (NYSE:CMI). This group of stocks’ market caps resemble TROW’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 49.9 hedge funds with bullish positions and the average amount invested in these stocks was $2954 million. That figure was $361 million in TROW’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand Verisk Analytics, Inc. (NASDAQ:VRSK) is the least popular one with only 32 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 39.3. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. A small number of hedge funds were also right about betting on TROW as the stock returned 15.6% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.