Is Prudential Financial Inc (PRU) A Good Stock To Buy?

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

Is Prudential Financial Inc (NYSE:PRU) a bargain? Prominent investors are becoming less confident. The number of bullish hedge fund positions decreased by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as General Mills, Inc. (NYSE:GIS), ACE Limited (NYSE:ACE), and Luxottica Group SpA (ADR) (NYSE:LUX) to gather more data points.

With all of this in mind, we’re going to analyze the new action encompassing Prudential Financial Inc (NYSE:PRU).

What does the smart money think about Prudential Financial Inc (NYSE:PRU)?

Heading into Q4, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the biggest position in Prudential Financial Inc (NYSE:PRU), worth close to $236.2 million, accounting for 1.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds an $148.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish encompass Martin D. Sass’ MD Sass, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Since Prudential Financial Inc (NYSE:PRU) has experienced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedgies that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Michael Messner’s Seminole Capital (Investment Mgmt) dropped the biggest investment of the 700 funds monitored by Insider Monkey, valued at an estimated $14 million in stock. Eric Halet and Davide Serra’s fund, Algebris Investments, also cut its stock, about $13.6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Prudential Financial Inc (NYSE:PRU) but similarly valued. These stocks are General Mills, Inc. (NYSE:GIS), ACE Limited (NYSE:ACE), Luxottica Group SpA (ADR) (NYSE:LUX), and VMware, Inc. (NYSE:VMW). This group of stocks’ market caps are similar to PRU’s market cap.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $698 million. That figure was $971 million in PRU’s case. ACE Limited (NYSE:ACE) is the most popular stock in this table. On the other hand Luxottica Group SpA (ADR) (NYSE:LUX) is the least popular one with only 5 bullish hedge fund positions. Prudential Financial Inc (NYSE:PRU) is the most popular stock in this group and that makes it worth a closer look.