Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Prologis Inc (NYSE:PLD).
Is Prologis Inc (NYSE:PLD) a good investment now? The best stock pickers are turning bullish. The number of bullish hedge fund bets advanced by 4 in recent months. Our calculations also showed that PLD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phill Gross of Adage Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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. Now let’s view the key hedge fund action encompassing Prologis Inc (NYSE:PLD).
What does smart money think about Prologis Inc (NYSE:PLD)?
Heading into the first quarter of 2020, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards PLD over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Prologis Inc (NYSE:PLD) was held by Citadel Investment Group, which reported holding $108.1 million worth of stock at the end of September. It was followed by AQR Capital Management with a $83.7 million position. Other investors bullish on the company included Adage Capital Management, Millennium Management, and Capital Growth Management. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to Prologis Inc (NYSE:PLD), around 4.69% of its 13F portfolio. Sustainable Insight Capital Management is also relatively very bullish on the stock, designating 2.98 percent of its 13F equity portfolio to PLD.
Consequently, key hedge funds have been driving this bullishness. Capital Growth Management, managed by Ken Heebner, initiated the most valuable position in Prologis Inc (NYSE:PLD). Capital Growth Management had $29.9 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also made a $15.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel S. Och’s OZ Management, Matthew Crandall Gilman’s Hill Winds Capital, and Eduardo Abush’s Waterfront Capital Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Prologis Inc (NYSE:PLD) but similarly valued. These stocks are Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), CSX Corporation (NASDAQ:CSX), Eni SpA (NYSE:E), and Marsh & McLennan Companies, Inc. (NYSE:MMC). This group of stocks’ market caps match PLD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRTX | 53 | 3271636 | 3 |
| CSX | 46 | 2345719 | 5 |
| E | 6 | 45145 | 0 |
| MMC | 31 | 649419 | 3 |
| Average | 34 | 1577980 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1578 million. That figure was $456 million in PLD’s case. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 6 bullish hedge fund positions. Prologis Inc (NYSE:PLD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. Unfortunately PLD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PLD were disappointed as the stock returned -17.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
