At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Primerica, Inc. (NYSE:PRI) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Primerica, Inc. (NYSE:PRI) shareholders have witnessed a decrease in hedge fund interest lately. Our calculations also showed that PRI 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.
To the average investor there are a lot of indicators shareholders use to grade publicly traded companies. A couple of the most useful indicators are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce their index-focused peers by a superb amount (see the details here).
Glenn Greenberg of Brave Warrior Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now let’s take a glance at the fresh hedge fund action encompassing Primerica, Inc. (NYSE:PRI).
Hedge fund activity in Primerica, Inc. (NYSE:PRI)
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in PRI over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Brave Warrior Capital held the most valuable stake in Primerica, Inc. (NYSE:PRI), which was worth $129.9 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $87.4 million worth of shares. GLG Partners, Marshall Wace LLP, and Renaissance Technologies 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 Brave Warrior Capital allocated the biggest weight to Primerica, Inc. (NYSE:PRI), around 7.48% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, setting aside 1.45 percent of its 13F equity portfolio to PRI.
Seeing as Primerica, Inc. (NYSE:PRI) has experienced falling interest from hedge fund managers, it’s easy to see that there were a few hedge funds that elected to cut their entire stakes by the end of the first quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners dropped the biggest stake of the 750 funds watched by Insider Monkey, comprising close to $2.9 million in stock, and Michael Kharitonov and Jon David McAuliffe’s Voleon Capital was right behind this move, as the fund dumped about $1.2 million worth. These moves are interesting, as total hedge fund interest fell by 5 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks similar to Primerica, Inc. (NYSE:PRI). These stocks are Everbridge, Inc. (NASDAQ:EVBG), Helen of Troy Limited (NASDAQ:HELE), Healthequity Inc (NASDAQ:HQY), and BridgeBio Pharma, Inc. (NASDAQ:BBIO). All of these stocks’ market caps are closest to PRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVBG | 31 | 796566 | -6 |
| HELE | 16 | 135725 | -1 |
| HQY | 19 | 96054 | -4 |
| BBIO | 12 | 1212843 | 1 |
| Average | 19.5 | 560297 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $560 million. That figure was $304 million in PRI’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand BridgeBio Pharma, Inc. (NASDAQ:BBIO) is the least popular one with only 12 bullish hedge fund positions. Primerica, Inc. (NYSE:PRI) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on PRI as the stock returned 32.3% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
