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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Argo Group International Holdings, Ltd. (NYSE:ARGO).
Is ARGO a good stock to buy now? Argo Group International Holdings, Ltd. (NYSE:ARGO) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that ARGO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare ARGO to other stocks including Viper Energy Partners LP (NASDAQ:VNOM), TowneBank (NASDAQ:TOWN), and INMODE LTD. (NASDAQ:INMD) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to view the key hedge fund action regarding Argo Group International Holdings, Ltd. (NYSE:ARGO).
Do Hedge Funds Think ARGO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ARGO over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, J. Daniel Plants's Voce Capital has the biggest position in Argo Group International Holdings, Ltd. (NYSE:ARGO), worth close to $112.7 million, amounting to 71.7% of its total 13F portfolio. The second most bullish fund manager is Pzena Investment Management, managed by Richard S. Pzena, which holds a $28.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other professional money managers that are bullish comprise D. E. Shaw's D E Shaw, Renaissance Technologies and Ron Bobman's Capital Returns Management. In terms of the portfolio weights assigned to each position Voce Capital allocated the biggest weight to Argo Group International Holdings, Ltd. (NYSE:ARGO), around 71.65% of its 13F portfolio. Capital Returns Management is also relatively very bullish on the stock, earmarking 12.36 percent of its 13F equity portfolio to ARGO.
Seeing as Argo Group International Holdings, Ltd. (NYSE:ARGO) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of fund managers that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the largest position of all the hedgies tracked by Insider Monkey, totaling an estimated $2.2 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund dumped about $0.8 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Argo Group International Holdings, Ltd. (NYSE:ARGO) but similarly valued. These stocks are Viper Energy Partners LP (NASDAQ:VNOM), TowneBank (NASDAQ:TOWN), INMODE LTD. (NASDAQ:INMD), Inter Parfums, Inc. (NASDAQ:IPAR), Cinemark Holdings, Inc. (NYSE:CNK), First Financial Bancorp (NASDAQ:FFBC), and Northwest Bancshares, Inc. (NASDAQ:NWBI). This group of stocks' market caps are similar to ARGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VNOM,11,26145,1 TOWN,12,28509,3 INMD,16,111188,5 IPAR,17,61695,2 CNK,25,150590,1 FFBC,16,20797,3 NWBI,9,20409,1 Average,15.1,59905,2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $176 million in ARGO's case. Cinemark Holdings, Inc. (NYSE:CNK) is the most popular stock in this table. On the other hand Northwest Bancshares, Inc. (NASDAQ:NWBI) is the least popular one with only 9 bullish hedge fund positions. Argo Group International Holdings, Ltd. (NYSE:ARGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARGO is 56.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on ARGO as the stock returned 29.3% since the end of Q3 (through 12/14) 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.