Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Prudential Financial Inc (NYSE:PRU) in this article.
Is Prudential Financial Inc (NYSE:PRU) a safe stock to buy now? The best stock pickers are taking a bearish view. The number of long hedge fund positions fell by 2 recently. Our calculations also showed that PRU 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a gander at the new hedge fund action encompassing Prudential Financial Inc (NYSE:PRU).
How have hedgies been trading Prudential Financial Inc (NYSE:PRU)?
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards PRU over the last 14 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in Prudential Financial Inc (NYSE:PRU) was held by AQR Capital Management, which reported holding $82.1 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $65.6 million position. Other investors bullish on the company included GLG Partners, Two Sigma Advisors, and Adage Capital Management.
Seeing as Prudential Financial Inc (NYSE:PRU) has experienced bearish sentiment from the smart money, it’s easy to see that there was a specific group of hedgies that decided to sell off their positions entirely by the end of the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of the 700 funds followed by Insider Monkey, totaling close to $90.3 million in stock. Malcolm Fairbairn’s fund, Ascend Capital, also said goodbye to its stock, about $30.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Prudential Financial Inc (NYSE:PRU) but similarly valued. These stocks are The Royal Bank of Scotland Group plc (NYSE:RBS), Fidelity National Information Services Inc. (NYSE:FIS), BB&T Corporation (NYSE:BBT), and ICICI Bank Limited (NYSE:IBN). All of these stocks’ market caps are similar to PRU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RBS | 3 | 26762 | -3 |
| FIS | 37 | 1540485 | 1 |
| BBT | 31 | 131659 | 11 |
| IBN | 26 | 745695 | 4 |
| Average | 24.25 | 611150 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $517 million in PRU’s case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand The Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 3 bullish hedge fund positions. Prudential Financial Inc (NYSE:PRU) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on PRU, though not to the same extent, as the stock returned 19% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
