PLDT Inc. (PHI): Hedge Fund Sentiment Unchanged

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding PLDT Inc. (NYSE:PHI).

Hedge fund interest in PLDT Inc. (NYSE:PHI) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PHI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare PHI to other stocks including Eagle Materials, Inc. (NYSE:EXP), Haemonetics Corporation (NYSE:HAE), and NeoGenomics, Inc. (NASDAQ:NEO) to get a better sense of its popularity.

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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to check out the recent hedge fund action encompassing PLDT Inc. (NYSE:PHI).

Do Hedge Funds Think PHI Is A Good Stock To Buy Now?

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in PHI a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the biggest position in PLDT Inc. (NYSE:PHI). Renaissance Technologies has a $85.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by D. E. Shaw of D E Shaw, with a $1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to PLDT Inc. (NYSE:PHI), around 0.11% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, dishing out 0.0046 percent of its 13F equity portfolio to PHI.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: AQR Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Marshall Wace LLP).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PLDT Inc. (NYSE:PHI) but similarly valued. We will take a look at Eagle Materials, Inc. (NYSE:EXP), Haemonetics Corporation (NYSE:HAE), NeoGenomics, Inc. (NASDAQ:NEO), Blueprint Medicines Corporation (NASDAQ:BPMC), Rexnord Corp (NYSE:RXN), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), and Upwork Inc. (NASDAQ:UPWK). This group of stocks’ market valuations match PHI’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $732 million. That figure was $87 million in PHI’s case. Haemonetics Corporation (NYSE:HAE) is the most popular stock in this table. On the other hand NeoGenomics, Inc. (NASDAQ:NEO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks PLDT Inc. (NYSE:PHI) is even less popular than NEO. Our overall hedge fund sentiment score for PHI is 20. 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. Hedge funds dodged a bullet by taking a bearish stance towards PHI. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately PHI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); PHI investors were disappointed as the stock returned 5.7% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.