Are Hedge Funds Losing Interest In Principal Financial Group Inc (PFG)?

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Principal Financial Group Inc (NYSE:PFG).

Principal Financial Group Inc (NYSE:PFG) has seen a decrease in enthusiasm from smart money recently. PFG was in 19 hedge funds’ portfolios at the end of the third quarter of 2015. There were 21 hedge funds in our database with PFG 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 Medivation Inc (NASDAQ:MDVN), Advance Auto Parts, Inc. (NYSE:AAP), and Rogers Communications Inc. (USA) (NYSE:RCI) to gather more data points.

Today there are dozens of tools shareholders put to use to assess stocks. A duo of the less utilized tools are hedge fund and insider trading signals. our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace their index-focused peers by a healthy amount (see the details here).

Keeping this in mind, let’s analyze the recent action surrounding Principal Financial Group Inc (NYSE:PFG).

How have hedgies been trading Principal Financial Group Inc (NYSE:PFG)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the most valuable position in Principal Financial Group Inc (NYSE:PFG), worth close to $95.9 million, comprising 0.5% of its total 13F portfolio. The second largest stake is held by Winton Capital Management, led by David Harding, holding a $20.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Phill Gross and Robert Atchinson’s Adage Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Ron Bobman’s Capital Returns Management.

Due to the fact that Principal Financial Group Inc (NYSE:PFG) has faced declining sentiment from the smart money, we can see that there were a few hedgies that elected to cut their full holdings by the end of the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the largest investment of the 700 funds monitored by Insider Monkey, comprising an estimated $76.1 million in stock, and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund dumped about $10 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Principal Financial Group Inc (NYSE:PFG). We will take a look at Medivation Inc (NASDAQ:MDVN), Advance Auto Parts, Inc. (NYSE:AAP), Rogers Communications Inc. (USA) (NYSE:RCI), and C.R. Bard, Inc. (NYSE:BCR). All of these stocks’ market caps are similar to PFG’s market cap.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1.06 billion. That figure was $164 million in PFG’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table. On the other hand, Rogers Communications Inc. (USA) (NYSE:RCI) is the least popular one with only 15 bullish hedge fund positions. Principal Financial Group Inc (NYSE:PFG) 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. In this regard AAP might be a better candidate to consider a long position.