With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Metlife Inc (NYSE:MET).
Is Metlife Inc (NYSE:MET) a bargain? Investors who are in the know were turning bullish. The number of bullish hedge fund positions improved by 9 in recent months. Metlife Inc (NYSE:MET) was in 41 hedge funds’ portfolios at the end of June. The all time high for this statistic is 50. Our calculations also showed that MET isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 let’s analyze the recent hedge fund action surrounding Metlife Inc (NYSE:MET).
Do Hedge Funds Think MET Is A Good Stock To Buy Now?
At the end of June, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MET over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Metlife Inc (NYSE:MET), which was worth $315.7 million at the end of the second quarter. On the second spot was Diamond Hill Capital which amassed $255.9 million worth of shares. Citadel Investment Group, Samlyn Capital, and Citadel Investment Group 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 Pzena Investment Management allocated the biggest weight to Metlife Inc (NYSE:MET), around 1.23% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, dishing out 1.15 percent of its 13F equity portfolio to MET.
As aggregate interest increased, key hedge funds have been driving this bullishness. Samlyn Capital, managed by Robert Pohly, established the largest position in Metlife Inc (NYSE:MET). Samlyn Capital had $78.6 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $42.3 million position during the quarter. The other funds with new positions in the stock are Jinghua Yan’s TwinBeech Capital, Paul Tudor Jones’s Tudor Investment Corp, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s go over hedge fund activity in other stocks similar to Metlife Inc (NYSE:MET). We will take a look at Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Biogen Inc. (NASDAQ:BIIB), Carvana Co. (NYSE:CVNA), ING Groep N.V. (NYSE:ING), UBS Group AG (NYSE:UBS), Relx PLC (NYSE:RELX), and Roblox Corporation (NYSE:RBLX). This group of stocks’ market caps resemble MET’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRTX | 60 | 2808847 | -8 |
| BIIB | 67 | 3116691 | 4 |
| CVNA | 63 | 8904829 | -1 |
| ING | 9 | 601603 | -1 |
| UBS | 15 | 176356 | -1 |
| RELX | 6 | 58838 | 2 |
| RBLX | 49 | 4914667 | 3 |
| Average | 38.4 | 2940262 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $2940 million. That figure was $1057 million in MET’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 6 bullish hedge fund positions. Metlife Inc (NYSE:MET) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MET is 63.3. 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 positive signal but 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 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately MET wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MET were disappointed as the stock returned 7.8% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
