Is PG&E Corporation (NYSE:PCG) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is PG&E Corporation (NYSE:PCG) worth your attention right now? Hedge funds are turning less bullish. The number of bullish hedge fund bets fell by 3 recently. Our calculations also showed that PCG isn’t among the 30 most popular stocks among hedge funds. Below, we will compare PCG against similarly valued stocks such as NewMarket Corporation (NYSE:NEU), Moderna, Inc. (NASDAQ:MRNA), JBG SMITH Properties (NYSE:JBGS), and Cree, Inc. (NASDAQ:CREE) to put things in context.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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