We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (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. Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards PLDT Inc. (NYSE:PHI).
PLDT Inc. (NYSE:PHI) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that PHI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
At the moment there are plenty of signals investors put to use to size up their stock investments. A pair of the most under-the-radar signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outclass the broader indices by a superb margin (see the details here).
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the new hedge fund action regarding PLDT Inc. (NYSE:PHI).
How have hedgies been trading PLDT Inc. (NYSE:PHI)?
Heading into the first quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PHI over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in PLDT Inc. (NYSE:PHI), which was worth $65.5 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $4.1 million worth of shares. Arrowstreet Capital, D E Shaw, and Two Sigma Advisors 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 Renaissance Technologies allocated the biggest weight to PLDT Inc. (NYSE:PHI), around 0.05% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to PHI.
As one would reasonably expect, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in PLDT Inc. (NYSE:PHI). Arrowstreet Capital had $2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.3 million position during the quarter.
Let’s go over hedge fund activity in other stocks similar to PLDT Inc. (NYSE:PHI). We will take a look at Ternium S.A. (NYSE:TX), New Jersey Resources Corp (NYSE:NJR), Colfax Corporation (NYSE:CFX), and Avnet, Inc. (NASDAQ:AVT). This group of stocks’ market caps are closest to PHI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TX | 11 | 124170 | 1 |
| NJR | 20 | 118866 | 4 |
| CFX | 43 | 904378 | 12 |
| AVT | 33 | 856160 | 2 |
| Average | 26.75 | 500894 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $75 million in PHI’s case. Colfax Corporation (NYSE:CFX) is the most popular stock in this table. On the other hand Ternium S.A. (NYSE:TX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks PLDT Inc. (NYSE:PHI) is even less popular than TX. Hedge funds clearly dropped the ball on PHI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still beat the market by 4.2 percentage points. A small number of hedge funds were also right about betting on PHI as the stock returned 20.4% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
