Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 15 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 1% through March 15th whereas the S&P 500 Index ETF lost 2.2% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at PLDT Inc. (NYSE:PHI) from the perspective of those elite funds.
Is PLDT Inc. (NYSE:PHI) undervalued? Investors who are in the know are buying. The number of long hedge fund bets moved up by 2 recently. Our calculations also showed that PHI isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s take a look at the recent hedge fund action encompassing PLDT Inc. (NYSE:PHI).
What does the smart money think about PLDT Inc. (NYSE:PHI)?
At Q4’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PHI over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PLDT Inc. (NYSE:PHI) was held by Renaissance Technologies, which reported holding $60.9 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $0.7 million position. Other investors bullish on the company included Two Sigma Advisors, Citadel Investment Group, and BlueCrest Capital Mgmt..
Now, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in PLDT Inc. (NYSE:PHI). Marshall Wace LLP had $0.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.5 million position during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PLDT Inc. (NYSE:PHI) but similarly valued. These stocks are New York Community Bancorp, Inc. (NYSE:NYCB), New Relic Inc (NYSE:NEWR), ADT Inc. (NYSE:ADT), and BRF S.A. (NYSE:BRFS). This group of stocks’ market valuations match PHI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NYCB | 15 | 133605 | 3 |
| NEWR | 28 | 446480 | 0 |
| ADT | 15 | 62341 | -4 |
| BRFS | 9 | 48699 | -1 |
| Average | 16.75 | 172781 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $63 million in PHI’s case. New Relic Inc (NYSE:NEWR) is the most popular stock in this table. On the other hand BRF S.A. (NYSE:BRFS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks PLDT Inc. (NYSE:PHI) is even less popular than BRFS. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately PHI wasn’t in this group. Hedge funds that bet on PHI were disappointed as the stock returned 8.2% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
