Was The Smart Money Right About Metlife Inc (MET)?

Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Metlife Inc (NYSE:MET) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Metlife Inc (NYSE:MET) has experienced a decrease in hedge fund interest of late. Metlife Inc (NYSE:MET) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. There were 41 hedge funds in our database with MET holdings at the end of June. Our calculations also showed that MET isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 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. With all of this in mind we’re going to take a peek at the latest hedge fund action encompassing Metlife Inc (NYSE:MET).

Richard S. Pzena of Pzena Investment Management

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

At the end of September, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MET over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Metlife Inc (NYSE:MET) was held by Pzena Investment Management, which reported holding $328.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $161.6 million position. Other investors bullish on the company included Millennium Management, D E Shaw, and Samlyn Capital. In terms of the portfolio weights assigned to each position Falcon Edge Capital allocated the biggest weight to Metlife Inc (NYSE:MET), around 2.25% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 2.07 percent of its 13F equity portfolio to MET.

Since Metlife Inc (NYSE:MET) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there exists a select few hedge funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Matthew Stadelman’s Diamond Hill Capital cut the biggest stake of all the hedgies followed by Insider Monkey, valued at about $255.9 million in stock. Jinghua Yan’s fund, TwinBeech Capital, also dumped its stock, about $8.9 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Metlife Inc (NYSE:MET) but similarly valued. We will take a look at IDEXX Laboratories, Inc. (NASDAQ:IDXX), Align Technology, Inc. (NASDAQ:ALGN), Lululemon Athletica inc. (NASDAQ:LULU), Public Storage (NYSE:PSA), NXP Semiconductors NV (NASDAQ:NXPI), Ferrari N.V. (NYSE:RACE), and Itau Unibanco Holding SA (NYSE:ITUB). All of these stocks’ market caps are closest to MET’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1510 million. That figure was $1145 million in MET’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 16 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 59.3. 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. 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 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on MET as the stock returned 9.5% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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