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Why Prudential PLC (PUK) Stock is a Compelling Investment Case

Third Point recently released its Q2 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 10.8% for the quarter, underperforming its benchmark, the S&P 500 Index which returned 20.5% in the same quarter. You should check out Third Point’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Third Point highlighted a few stocks and Prudential Plc (NYSE:PUK) is one of them. Prudential Plc (NYSE:PUK) is a life insurance company. Year-to-date, Prudential Plc (NYSE:PUK) stock lost 15.0% and on August 7th it had a closing price of $31.79. Here is what Third Point said:

“Prudential plc stock performed well in the Second Quarter, gaining 18% as concerns over Prudential’s U.S. business, Jackson National, waned and management proved the efficacy of Jackson’s robust hedging program. However, the volatility in the shares over the past few months has confirmed our view that accurate price discovery by the market will prove elusive unless Jackson National is held in a separate corporate entity from Pru Asia.

We were pleased by the Board’s recent announcement of a combined equity investment and reinsurance transaction between Jackson and Athene, a leading annuities company affiliated with Apollo Global Management. Athene will reinsure Jackson’s $28 billion fixed and fixed indexed annuities portfolio, as well as make a $500 million anchor equity investment in Jackson in exchange for an 11.1% economic stake. We believe that this transaction is an important step towards full separation of Jackson and Pru Asia. It increases capital levels at Jackson to be more in‐line with standalone publicly traded peers, a critical consideration for regulators and ratings agencies when evaluating an independent U.S. business. It also puts a floor valuation mark on Jackson equity from a respected market player ahead of a standalone listing.

We continue to advocate for expeditious action in our constructive dialogue with management and the Board. We are confident that an independent Jackson can unlock significant value by closing the still‐large complexity discount in the stock. When Prudential’s fast‐growing Asia business becomes a pure‐play, investors will better appreciate this high‐quality business, leading to significant multiple expansion. We look forward to an update on the company’s restructuring plans on its August 11 earnings call.”

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In Q1 2020, the number of bullish hedge fund positions on Prudential Plc (NYSE:PUK)  stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Prudential Plc (NYSE:PUK)  isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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