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Prudential Public Limited Company (PUK): Hedge Funds In Wait-and-See Mode

In this article we will take a look at whether hedge funds think Prudential Public Limited Company (NYSE:PUK) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Prudential Public Limited Company (NYSE:PUK) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of March. 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 Bank of Montreal (NYSE:BMO), Enterprise Products Partners L.P. (NYSE:EPD), and Orange SA (NYSE:ORAN) to gather more data points. Our calculations also showed that PUK isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the latest hedge fund action surrounding Prudential Public Limited Company (NYSE:PUK).

What have hedge funds been doing with Prudential Public Limited Company (NYSE:PUK)?

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PUK over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Prudential Public Limited Company (NYSE:PUK), with a stake worth $21.6 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $17.4 million. Millennium Management, Solel Partners, and McKinley Capital Management 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 Solel Partners allocated the biggest weight to Prudential Public Limited Company (NYSE:PUK), around 0.89% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to PUK.

Because Prudential Public Limited Company (NYSE:PUK) has experienced declining sentiment from hedge fund managers, logic holds that there is a sect of money managers who sold off their positions entirely in the first quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $1.2 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dropped about $0.4 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 Prudential Public Limited Company (NYSE:PUK) but similarly valued. These stocks are Bank of Montreal (NYSE:BMO), Enterprise Products Partners L.P. (NYSE:EPD), Orange SA (NYSE:ORAN), and General Mills, Inc. (NYSE:GIS). This group of stocks’ market valuations match PUK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BMO 13 150563 0
EPD 26 215411 -2
ORAN 5 12940 3
GIS 39 690598 2
Average 20.75 267378 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $44 million in PUK’s case. General Mills, Inc. (NYSE:GIS) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 5 bullish hedge fund positions. Prudential Public Limited Company (NYSE:PUK) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately PUK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PUK investors were disappointed as the stock returned 22.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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