In this article you are going to find out whether hedge funds think Metlife Inc (NYSE:MET) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is MET stock a buy? Prominent investors were taking an optimistic view. The number of bullish hedge fund bets improved by 1 recently. Metlife Inc (NYSE:MET) was in 37 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. Our calculations also showed that MET isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a look at the recent hedge fund action surrounding Metlife Inc (NYSE:MET).
Do Hedge Funds Think MET Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the third quarter of 2020. On the other hand, there were a total of 38 hedge funds with a bullish position in MET a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Diamond Hill Capital, managed by Ric Dillon, holds the most valuable position in Metlife Inc (NYSE:MET). Diamond Hill Capital has a $267.2 million position in the stock, comprising 1.3% of its 13F portfolio. The second largest stake is held by Pzena Investment Management, led by Richard S. Pzena, holding a $253.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Andreas Halvorsen’s Viking Global, Noam Gottesman’s GLG Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position CSat Investment Advisory allocated the biggest weight to Metlife Inc (NYSE:MET), around 1.78% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, earmarking 1.26 percent of its 13F equity portfolio to MET.
As aggregate interest increased, key hedge funds were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, initiated the largest position in Metlife Inc (NYSE:MET). Viking Global had $156.8 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $4.9 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Greg Poole’s Echo Street Capital Management, and Ronald Hua’s Qtron Investments.
Let’s now review hedge fund activity in other stocks similar to Metlife Inc (NYSE:MET). We will take a look at Roku, Inc. (NASDAQ:ROKU), Align Technology, Inc. (NASDAQ:ALGN), Electronic Arts Inc. (NASDAQ:EA), National Grid plc (NYSE:NGG), Unity Software Inc. (NYSE:U), DocuSign, Inc. (NASDAQ:DOCU), and Moderna, Inc. (NASDAQ:MRNA). This group of stocks’ market caps are similar to MET’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROKU | 60 | 3237943 | 1 |
| ALGN | 50 | 2480630 | 3 |
| EA | 50 | 1050954 | -12 |
| NGG | 5 | 352676 | -1 |
| U | 32 | 11908726 | -3 |
| DOCU | 67 | 4232054 | 5 |
| MRNA | 41 | 1479400 | 9 |
| Average | 43.6 | 3534626 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.6 hedge funds with bullish positions and the average amount invested in these stocks was $3535 million. That figure was $983 million in MET’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 5 bullish hedge fund positions. Metlife Inc (NYSE:MET) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MET is 54. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. A small number of hedge funds were also right about betting on MET as the stock returned 32.4% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
