Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Prologis Inc (NYSE:PLD).
Is PLD stock a buy or sell? Money managers were taking an optimistic view. The number of long hedge fund positions improved by 3 recently. Prologis Inc (NYSE:PLD) was in 36 hedge funds’ portfolios at the end of December. 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 Q4 rankings). There were 33 hedge funds in our database with PLD holdings at the end of September.
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.
Lee Ainslie of Maverick Capital
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. Now we’re going to check out the new hedge fund action encompassing Prologis Inc (NYSE:PLD).
Do Hedge Funds Think PLD Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in PLD a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Prologis Inc (NYSE:PLD), which was worth $105.7 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $101.2 million worth of shares. Adage Capital Management, AQR Capital Management, and Maverick Capital 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 Masterton Capital Management allocated the biggest weight to Prologis Inc (NYSE:PLD), around 5.21% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, setting aside 4.4 percent of its 13F equity portfolio to PLD.
Now, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Prologis Inc (NYSE:PLD). Citadel Investment Group had $101.2 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $51.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Poole’s Echo Street Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Mark R. Freeman’s Socorro Asset Management.
Let’s check out hedge fund activity in other stocks similar to Prologis Inc (NYSE:PLD). We will take a look at Colgate-Palmolive Company (NYSE:CL), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), Gilead Sciences, Inc. (NASDAQ:GILD), Becton, Dickinson and Company (NYSE:BDX), KE Holdings Inc (NYSE:BEKE), Infosys Limited (NYSE:INFY), and Activision Blizzard, Inc. (NASDAQ:ATVI). This group of stocks’ market values are closest to PLD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CL | 46 | 1515874 | -1 |
| PBR | 24 | 1335976 | -7 |
| GILD | 72 | 2021867 | 11 |
| BDX | 65 | 3961016 | 3 |
| BEKE | 30 | 2038963 | 2 |
| INFY | 23 | 1755104 | 1 |
| ATVI | 81 | 3739018 | -12 |
| Average | 48.7 | 2338260 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.7 hedge funds with bullish positions and the average amount invested in these stocks was $2338 million. That figure was $655 million in PLD’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 23 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 46.2. 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 PLD as the stock returned 9.5% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.
Follow Prologis Inc. (NYSE:PLD)
Follow Prologis Inc. (NYSE:PLD)
Disclosure: None. This article was originally published at Insider Monkey.
