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Should You Consider Investing in Prudential plc (PUK)?

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Third Point Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio return of +12.5% was delivered by the flagship Offshore Fund, bringing year-to-date returns to +29.5%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Third Point Management, in its Q3 2021 investor letter, mentioned Prudential plc (NYSE: PUK) and discussed its stance on the firm. Prudential plc is a London, United Kingdom-based insurance company with a $57.2 billion market capitalization. PUK delivered a 16.42% return since the beginning of the year, while its 12-month returns are up by 74.78%. The stock closed at $41.67 per share on October 29, 2021.

Here is what Third Point Management has to say about Prudential plc in its Q3 2021 investor letter:

"During the quarter, Prudential successfully completed its previously announced spin-off of Jackson National and raised additional equity in Asia for the remaining Pru-Asia business. We are pleased to see the value gap begin to close but see considerable additional appreciation potential as Asian-domiciled and other global investors begin to fully appreciate its significant discount to its peers, excellent franchise, and growth potential."

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Based on our calculations, Prudential plc (NYSE: PUK) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. PUK was in 4 hedge fund portfolios at the end of the first half of 2021, compared to 2 funds in the previous quarter. Prudential plc (NYSE: PUK) delivered a 14.38% return in the past 3 months.

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 S&P 500 ETFs by 115 percentage points since March 2017 (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 would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high-growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy 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.

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