It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards PPL Corporation (NYSE:PPL) during the quarter below.
Is PPL Corporation (NYSE:PPL) worth your attention right now? The smart money is becoming hopeful. The number of bullish hedge fund positions increased by 1 recently. PPL was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. There were 22 hedge funds in our database with PPL positions 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 Energy Transfer Equity, L.P. (NYSE:ETE), Koninklijke Philips Electronics NV (ADR) (NYSE:PHG), and Delphi Automotive PLC (NYSE:DLPH) to gather more data points.
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At the moment there are plenty of indicators market participants have at their disposal to grade their stock investments. Some of the most innovative indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a superb amount (see the details here).
With all of this in mind, we’re going to take a look at the new action regarding PPL Corporation (NYSE:PPL).
How are hedge funds trading PPL Corporation (NYSE:PPL)?
Heading into Q4, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in PPL Corporation (NYSE:PPL). Millennium Management has a $372.5 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $98.7 million position; 0.3% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism contain Jonathan Barrett and Paul Segal’s Luminus Management, Stuart J. Zimmer’s Zimmer Partners and Jacob Gottlieb’s Visium Asset Management.
As one would reasonably expect, specific money managers have jumped into PPL Corporation (NYSE:PPL) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in PPL Corporation (NYSE:PPL). Balyasny Asset Management had $15.8 million invested in the company at the end of the quarter. Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners also initiated a $5.4 million position during the quarter. The other funds with brand new PPL positions are Millennium Management Subsidiary’s Green Arrow Capital Management, Jim Simons’ Renaissance Technologies, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PPL Corporation (NYSE:PPL) but similarly valued. These stocks are Energy Transfer Equity, L.P. (NYSE:ETE), Koninklijke Philips Electronics NV (ADR) (NYSE:PHG), Delphi Automotive PLC (NYSE:DLPH), and Dollar General Corp. (NYSE:DG). This group of stocks’ market caps resemble PPL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETE | 27 | 709740 | -6 |
| PHG | 8 | 305627 | -5 |
| DLPH | 40 | 961139 | 1 |
| DG | 49 | 1479609 | -9 |
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $864 million. That figure was $802 million in PPL’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) is the least popular one with only 8 bullish hedge fund positions. PPL Corporation (NYSE:PPL) 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 DG might be a better candidate to consider for a long position.
