Hedge Funds Aren’t Crazy About PG&E Corporation (PCG) Anymore

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about PG&E Corporation (NYSE:PCG).

Is PG&E Corporation (NYSE:PCG) the right investment to pursue these days? The smart money was taking a pessimistic view. The number of bullish hedge fund bets shrunk by 1 in recent months. PG&E Corporation (NYSE:PCG) was in 65 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 92. Our calculations also showed that PCG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 66 hedge funds in our database with PCG holdings at the end of December.

According to most market participants, hedge funds are seen as slow, outdated financial tools of yesteryear. While there are more than 8000 funds trading at present, Our experts hone in on the moguls of this group, about 850 funds. These hedge fund managers watch over the lion’s share of all hedge funds’ total capital, and by tracking their unrivaled picks, Insider Monkey has identified numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Stuart Zimmer of Zimmer Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Keeping this in mind let’s take a look at the key hedge fund action surrounding PG&E Corporation (NYSE:PCG).

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

Heading into the second quarter of 2021, a total of 65 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. On the other hand, there were a total of 48 hedge funds with a bullish position in PCG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in PG&E Corporation (NYSE:PCG) was held by Third Point, which reported holding $971.2 million worth of stock at the end of December. It was followed by Zimmer Partners with a $549 million position. Other investors bullish on the company included Baupost Group, Silver Point Capital, and Appaloosa Management LP. In terms of the portfolio weights assigned to each position Silver Point Capital allocated the biggest weight to PG&E Corporation (NYSE:PCG), around 36.04% of its 13F portfolio. Cyrus Capital Partners is also relatively very bullish on the stock, dishing out 25.02 percent of its 13F equity portfolio to PCG.

Because PG&E Corporation (NYSE:PCG) has witnessed a decline in interest from the smart money, we can see that there is a sect of funds that elected to cut their entire stakes by the end of the first quarter. Interestingly, Kevin Michael Ulrich and Anthony Davis’s Anchorage Advisors dropped the biggest investment of the 750 funds tracked by Insider Monkey, comprising an estimated $322.5 million in stock. Kevin Michael Ulrich and Anthony Davis’s fund, Anchorage Advisors, also dropped its stock, about $85.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks similar to PG&E Corporation (NYSE:PCG). We will take a look at Arista Networks Inc (NYSE:ANET), Yandex NV (NASDAQ:YNDX), Li Auto Inc. (NASDAQ:LI), United Microelectronics Corp (NYSE:UMC), ONEOK, Inc. (NYSE:OKE), Baker Hughes Company (NYSE:BKR), and Verisign, Inc. (NASDAQ:VRSN). This group of stocks’ market caps match PCG’s market cap.

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As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $1265 million. That figure was $5665 million in PCG’s case. Baker Hughes Company (NYSE:BKR) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks PG&E Corporation (NYSE:PCG) is more popular among hedge funds. Our overall hedge fund sentiment score for PCG is 75.2. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately PCG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PCG were disappointed as the stock returned -10.3% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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