At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not PPL Corporation (NYSE:PPL) makes for a good investment right now.
Is PPL Corporation (NYSE:PPL) ready to rally soon? The best stock pickers were turning bullish. The number of bullish hedge fund bets advanced by 4 lately. PPL Corporation (NYSE:PPL) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic is 32. Our calculations also showed that PPL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 21 hedge funds in our database with PPL holdings at the end of December.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. 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. Keeping this in mind let’s check out the latest hedge fund action encompassing PPL Corporation (NYSE:PPL).
Do Hedge Funds Think PPL Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in PPL a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in PPL Corporation (NYSE:PPL), which was worth $57.2 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $27.3 million worth of shares. Citadel Investment Group, Citadel Investment Group, and Laurion 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 Sustainable Insight Capital Management allocated the biggest weight to PPL Corporation (NYSE:PPL), around 0.99% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, setting aside 0.3 percent of its 13F equity portfolio to PPL.
As aggregate interest increased, key money managers have jumped into PPL Corporation (NYSE:PPL) headfirst. Renaissance Technologies, created the most outsized position in PPL Corporation (NYSE:PPL). Renaissance Technologies had $57.2 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $7.9 million investment in the stock during the quarter. The other funds with brand new PPL positions are D. E. Shaw’s D E Shaw, Michael Gelband’s ExodusPoint Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PPL Corporation (NYSE:PPL) but similarly valued. These stocks are Equifax Inc. (NYSE:EFX), Cerner Corporation (NASDAQ:CERN), POSCO (NYSE:PKX), Splunk Inc (NASDAQ:SPLK), Northern Trust Corporation (NASDAQ:NTRS), Royal Caribbean Group (NYSE:RCL), and Hess Corporation (NYSE:HES). All of these stocks’ market caps resemble PPL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EFX | 37 | 2475296 | 1 |
| CERN | 40 | 1135093 | 6 |
| PKX | 12 | 157036 | 2 |
| SPLK | 41 | 934345 | -6 |
| NTRS | 28 | 348449 | -3 |
| RCL | 42 | 594423 | 5 |
| HES | 26 | 556388 | -7 |
| Average | 32.3 | 885861 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $886 million. That figure was $152 million in PPL’s case. Royal Caribbean Group (NYSE:RCL) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 12 bullish hedge fund positions. PPL Corporation (NYSE:PPL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PPL is 54.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately PPL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PPL investors were disappointed as the stock returned 0% since the end of March (through 7/9) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
