Is Principal Financial Group Inc (NASDAQ:PFG) ready to rally soon? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets improved by 3 in recent months. Our calculations also showed that PFG isn’t among the 30 most popular stocks among hedge funds.
At the moment there are tons of formulas investors can use to evaluate stocks. A duo of the less utilized formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best investment managers can trounce the broader indices by a healthy amount (see the details here).
We’re going to analyze the new hedge fund action surrounding Principal Financial Group Inc (NASDAQ:PFG).
What have hedge funds been doing with Principal Financial Group Inc (NASDAQ:PFG)?
At Q4’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in PFG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Principal Financial Group Inc (NASDAQ:PFG) was held by Two Sigma Advisors, which reported holding $54.4 million worth of stock at the end of September. It was followed by Millennium Management with a $9.2 million position. Other investors bullish on the company included AQR Capital Management, Prana Capital Management, and GLG Partners.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most valuable position in Principal Financial Group Inc (NASDAQ:PFG). Millennium Management had $9.2 million invested in the company at the end of the quarter. Peter Seuss’s Prana Capital Management also initiated a $6.8 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Minhua Zhang’s Weld Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Principal Financial Group Inc (NASDAQ:PFG) but similarly valued. We will take a look at CNH Industrial NV (NYSE:CNHI), STMicroelectronics N.V. (NYSE:STM), ZTO Express (Cayman) Inc. (NYSE:ZTO), and Darden Restaurants, Inc. (NYSE:DRI). This group of stocks’ market valuations match PFG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNHI | 16 | 295732 | 2 |
| STM | 11 | 168370 | 0 |
| ZTO | 13 | 305011 | 1 |
| DRI | 37 | 1174556 | 15 |
| Average | 19.25 | 485917 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $486 million. That figure was $98 million in PFG’s case. Darden Restaurants, Inc. (NYSE:DRI) is the most popular stock in this table. On the other hand STMicroelectronics N.V. (NYSE:STM) is the least popular one with only 11 bullish hedge fund positions. Principal Financial Group Inc (NASDAQ:PFG) 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. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on PFG, though not to the same extent, as the stock returned 19.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.