In this article you are going to find out whether hedge funds think Prudential Financial Inc (NYSE:PRU) 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 PRU stock a buy? Investors who are in the know were betting on the stock. The number of long hedge fund positions improved by 2 in recent months. Prudential Financial Inc (NYSE:PRU) was in 36 hedge funds’ portfolios at the end of December. The all time high for this statistic is 39. Our calculations also showed that PRU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 34 hedge funds in our database with PRU holdings at the end of September.
Paul Marshall of Marshall Wace
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 let’s check out the new hedge fund action regarding Prudential Financial Inc (NYSE:PRU).
Do Hedge Funds Think PRU Is A Good Stock To Buy Now?
At the end of December, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in PRU over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the largest position in Prudential Financial Inc (NYSE:PRU), worth close to $247.4 million, comprising 0.3% of its total 13F portfolio. Coming in second is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $44.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Paul Marshall and Ian Wace’s Marshall Wace LLP, Phill Gross and Robert Atchinson’s Adage Capital Management and Peter Seuss’s Prana Capital Management. In terms of the portfolio weights assigned to each position Mountain Road Advisors allocated the biggest weight to Prudential Financial Inc (NYSE:PRU), around 6.89% of its 13F portfolio. Prana Capital Management is also relatively very bullish on the stock, setting aside 4.02 percent of its 13F equity portfolio to PRU.
As aggregate interest increased, some big names have been driving this bullishness. Prana Capital Management, managed by Peter Seuss, assembled the biggest position in Prudential Financial Inc (NYSE:PRU). Prana Capital Management had $30.8 million invested in the company at the end of the quarter. Gordon W Malin’s Mountain Road Advisors also initiated a $27.3 million position during the quarter. The other funds with brand new PRU positions are Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management, Matthew Tewksbury’s Stevens Capital Management, and D. E. Shaw’s D E Shaw.
Let’s check out hedge fund activity in other stocks similar to Prudential Financial Inc (NYSE:PRU). We will take a look at Hilton Worldwide Holdings Inc (NYSE:HLT), ResMed Inc. (NYSE:RMD), Republic Services, Inc. (NYSE:RSG), QuantumScape Corporation (NYSE:QS), Zillow Group Inc (NASDAQ:Z), LyondellBasell Industries NV (NYSE:LYB), and Phillips 66 (NYSE:PSX). This group of stocks’ market values match PRU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLT | 60 | 6029309 | 3 |
| RMD | 27 | 355462 | -8 |
| RSG | 36 | 1099427 | -1 |
| QS | 35 | 1848564 | 35 |
| Z | 83 | 5812175 | 14 |
| LYB | 27 | 682905 | -4 |
| PSX | 26 | 191517 | -1 |
| Average | 42 | 2288480 | 5.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $2288 million. That figure was $532 million in PRU’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Phillips 66 (NYSE:PSX) is the least popular one with only 26 bullish hedge fund positions. Prudential Financial Inc (NYSE:PRU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PRU is 43.5. 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 PRU as the stock returned 20.5% 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.
