Is PLDT Inc. (PHI) A Good Stock To Buy?

Nina Todic

Mon, Oct 14, 2019, 6:59 PM

Is PLDT Inc. (NYSE:PHI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

PLDT Inc. (NYSE:PHI) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of June. At the end of this article we will also compare PHI to other stocks including Curtiss-Wright Corporation (NYSE:CW), LG Display Co Ltd. (NYSE:LPL), and Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) to get a better sense of its popularity.

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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's review the latest hedge fund action regarding PLDT Inc. (NYSE:PHI).

How have hedgies been trading PLDT Inc. (NYSE:PHI)?

At the end of the second quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards PHI over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in PLDT Inc. (NYSE:PHI), which was worth $75.7 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $1.4 million worth of shares. Moreover, Two Sigma Advisors, Marshall Wace LLP, and Citadel Investment Group were also bullish on PLDT Inc. (NYSE:PHI), allocating a large percentage of their portfolios to this stock.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium 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 Arrowstreet Capital).

Let's now review hedge fund activity in other stocks similar to PLDT Inc. (NYSE:PHI). These stocks are Curtiss-Wright Corporation (NYSE:CW), LG Display Co Ltd. (NYSE:LPL), Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI), and Polaris Inc. (NYSE:PII). This group of stocks' market values resemble PHI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CW,19,442818,-2 LPL,3,11105,-3 OLLI,31,257964,9 PII,24,243800,8 Average,19.25,238922,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $79 million in PHI's case. Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 3 bullish hedge fund positions. PLDT Inc. (NYSE:PHI) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PHI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PHI investors were disappointed as the stock returned -8.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019.