A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Prologis Inc (NYSE:PLD).
Is PLD a good stock to buy? Investors who are in the know were in a pessimistic mood. The number of bullish hedge fund bets retreated by 2 lately. Prologis Inc (NYSE:PLD) was in 33 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 40. Our calculations also showed that PLD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Martin Whitman of Third Avenue Management
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 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Now let’s take a look at the latest hedge fund action encompassing Prologis Inc (NYSE:PLD).
Do Hedge Funds Think PLD Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PLD over the last 21 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Zimmer Partners held the most valuable stake in Prologis Inc (NYSE:PLD), which was worth $108.2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $94.7 million worth of shares. AQR Capital Management, Adage Capital Management, and Third Avenue Management 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 Third Avenue Management allocated the biggest weight to Prologis Inc (NYSE:PLD), around 4.9% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, earmarking 2.31 percent of its 13F equity portfolio to PLD.
Since Prologis Inc (NYSE:PLD) has experienced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who were dropping their positions entirely heading into Q4. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dropped the biggest investment of the 750 funds monitored by Insider Monkey, totaling about $37.1 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also cut its stock, about $5.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
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 Square, Inc. (NYSE:SQ), Altria Group Inc (NYSE:MO), JD.Com Inc (NASDAQ:JD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), KE Holdings Inc (NYSE:BEKE), Snowflake Inc (NYSE:SNOW), and Booking Holdings Inc. (NASDAQ:BKNG). All of these stocks’ market caps resemble PLD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SQ | 73 | 6501994 | 7 |
| MO | 47 | 1259705 | 4 |
| JD | 85 | 13574479 | -2 |
| VRTX | 55 | 3419082 | 1 |
| BEKE | 28 | 1327441 | 28 |
| SNOW | 59 | 4614302 | 59 |
| BKNG | 113 | 6675435 | 17 |
| Average | 65.7 | 5338920 | 16.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 65.7 hedge funds with bullish positions and the average amount invested in these stocks was $5339 million. That figure was $518 million in PLD’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand KE Holdings Inc (NYSE:BEKE) is the least popular one with only 28 bullish hedge fund positions. Prologis Inc (NYSE:PLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLD is 30.7. 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and surpassed the market again by 16.4 percentage points. Unfortunately PLD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PLD investors were disappointed as the stock returned -2% since the end of September (through 12/18) 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 most of these stocks already outperformed the market in 2020.
Follow Prologis Inc. (NYSE:PLD)
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Disclosure: None. This article was originally published at Insider Monkey.
