Is The Procter & Gamble Company (NYSE:PG) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is PG stock a buy or sell? The Procter & Gamble Company (NYSE:PG) has experienced an increase in hedge fund interest in recent months. The Procter & Gamble Company (NYSE:PG) was in 83 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 79. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 75 hedge funds in our database with PG holdings at the end of September. Our calculations also showed that PG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nelson Peltz of Trian Partners
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Do Hedge Funds Think PG Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 83 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PG over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cedar Rock Capital was the largest shareholder of The Procter & Gamble Company (NYSE:PG), with a stake worth $1372.5 million reported as of the end of December. Trailing Cedar Rock Capital was Trian Partners, which amassed a stake valued at $1366.9 million. Arrowstreet Capital, GQG Partners, and AQR Capital 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 Cedar Rock Capital allocated the biggest weight to The Procter & Gamble Company (NYSE:PG), around 29.68% of its 13F portfolio. Trian Partners is also relatively very bullish on the stock, earmarking 20.23 percent of its 13F equity portfolio to PG.
Consequently, specific money managers were leading the bulls’ herd. Voleon Capital, managed by Michael Kharitonov and Jon David McAuliffe, assembled the most valuable position in The Procter & Gamble Company (NYSE:PG). Voleon Capital had $29.1 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $16.9 million position during the quarter. The other funds with brand new PG positions are Paul Tudor Jones’s Tudor Investment Corp, Steven Boyd’s Armistice Capital, and Nicholas Bagnall’s Te Ahumairangi Investment Management.
Let’s now take a look at hedge fund activity in other stocks similar to The Procter & Gamble Company (NYSE:PG). These stocks are UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), Paypal Holdings Inc (NASDAQ:PYPL), Bank of America Corporation (NYSE:BAC), and Verizon Communications Inc. (NYSE:VZ). This group of stocks’ market values match PG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UNH | 91 | 10778450 | 2 |
| DIS | 144 | 16417240 | 32 |
| NVDA | 88 | 8692203 | 6 |
| HD | 79 | 4924208 | 6 |
| PYPL | 147 | 15961182 | -3 |
| BAC | 99 | 35340008 | 11 |
| VZ | 67 | 10502830 | 2 |
| Average | 102.1 | 14659446 | 8 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 102.1 hedge funds with bullish positions and the average amount invested in these stocks was $14659 million. That figure was $10422 million in PG’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand Verizon Communications Inc. (NYSE:VZ) is the least popular one with only 67 bullish hedge fund positions. The Procter & Gamble Company (NYSE:PG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PG is 50. 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 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% in 2021 through March 12th and surpassed the market again by 1.6 percentage points. Unfortunately PG wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); PG investors were disappointed as the stock returned -7.4% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
