Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value 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 Prologis Inc (NYSE:PLD) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Prologis Inc (NYSE:PLD) ready to rally soon? Hedge funds were taking a pessimistic view. The number of long hedge fund positions shrunk by 8 in recent months. Prologis Inc (NYSE:PLD) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that PLD 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 review the new hedge fund action regarding Prologis Inc (NYSE:PLD).
Martin Whitman of Third Avenue Management
Do Hedge Funds Think PLD Is A Good Stock To Buy Now?
At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards PLD over the last 25 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in Prologis Inc (NYSE:PLD). Adage Capital Management has a $107 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $98.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include Cliff Asness’s AQR Capital Management, Martin Whitman’s Third Avenue Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Prologis Inc (NYSE:PLD), around 4.31% of its 13F portfolio. Socorro Asset Management is also relatively very bullish on the stock, earmarking 2.73 percent of its 13F equity portfolio to PLD.
Because Prologis Inc (NYSE:PLD) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds who sold off their entire stakes in the third quarter. At the top of the heap, Eduardo Abush’s Waterfront Capital Partners sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $33.8 million in stock. Ken Heebner’s fund, Capital Growth Management, also sold off its stock, about $12 million worth. These moves are interesting, as total hedge fund interest was cut by 8 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Prologis Inc (NYSE:PLD). These stocks are Zoetis Inc (NYSE:ZTS), BP plc (NYSE:BP), Snowflake Inc (NYSE:SNOW), Anthem Inc (NYSE:ANTM), ConocoPhillips (NYSE:COP), Analog Devices, Inc. (NASDAQ:ADI), and U.S. Bancorp (NYSE:USB). This group of stocks’ market values are similar to PLD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZTS | 58 | 2713394 | 0 |
| BP | 29 | 1053236 | -1 |
| SNOW | 73 | 14569929 | 3 |
| ANTM | 59 | 4585560 | -8 |
| COP | 49 | 1371142 | -1 |
| ADI | 74 | 5698767 | 12 |
| USB | 42 | 8390873 | 1 |
| Average | 54.9 | 5483272 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.9 hedge funds with bullish positions and the average amount invested in these stocks was $5483 million. That figure was $483 million in PLD’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. Prologis Inc (NYSE:PLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLD is 24.3. 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. A small number of hedge funds were also right about betting on PLD as the stock returned 25.5% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Prologis Inc. (NYSE:PLD)
Follow Prologis Inc. (NYSE:PLD)
Suggested Articles:
- 15 Biggest Trucking Companies In The World
- 15 Biggest Product Flops in History
- 12 Undervalued Cyclical Stocks for 2021
Disclosure: None. This article was originally published at Insider Monkey.
