Hedge Funds Are Piling Into Prologis Inc (PLD)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Prologis Inc (NYSE:PLD).

Prologis Inc (NYSE:PLD) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. Prologis Inc (NYSE:PLD) was in 40 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that PLD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Phillip Gross of Adage Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a gander at the latest hedge fund action encompassing Prologis Inc (NYSE:PLD).

Do Hedge Funds Think PLD Is A Good Stock To Buy Now?

At second quarter’s end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. By comparison, 35 hedge funds held shares or bullish call options in PLD a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, Adage Capital Management was the largest shareholder of Prologis Inc (NYSE:PLD), with a stake worth $103.9 million reported as of the end of June. Trailing Adage Capital Management was Millennium Management, which amassed a stake valued at $96.9 million. AQR Capital Management, Citadel Investment Group, and Waterfront Capital Partners 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 Third Avenue Management allocated the biggest weight to Prologis Inc (NYSE:PLD), around 4.05% of its 13F portfolio. Socorro Asset Management is also relatively very bullish on the stock, dishing out 3.34 percent of its 13F equity portfolio to PLD.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Waterfront Capital Partners, managed by Eduardo Abush, established the most valuable position in Prologis Inc (NYSE:PLD). Waterfront Capital Partners had $33.8 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $18 million position during the quarter. The other funds with new positions in the stock are Ken Heebner’s Capital Growth Management, Matthew Hulsizer’s PEAK6 Capital Management, and Ray Dalio’s Bridgewater Associates.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Prologis Inc (NYSE:PLD) but similarly valued. We will take a look at Altria Group Inc (NYSE:MO), Fidelity National Information Services Inc. (NYSE:FIS), Mondelez International Inc (NASDAQ:MDLZ), NIO Inc. (NYSE:NIO), Gilead Sciences, Inc. (NASDAQ:GILD), General Motors Company (NYSE:GM), and U.S. Bancorp (NYSE:USB). All of these stocks’ market caps are similar to PLD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 55.3 hedge funds with bullish positions and the average amount invested in these stocks was $4398 million. That figure was $564 million in PLD’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 34 bullish hedge fund positions. Prologis Inc (NYSE:PLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLD is 41.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on PLD as the stock returned 8.4% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.

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