The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Argo Group International Holdings, Ltd. (NYSE:ARGO) based on those filings.
Argo Group International Holdings, Ltd. (NYSE:ARGO) shareholders have witnessed a decrease in enthusiasm from smart money recently. ARGO was in 16 hedge funds' portfolios at the end of the first quarter of 2020. There were 19 hedge funds in our database with ARGO holdings at the end of the previous quarter. Our calculations also showed that ARGO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a multitude of tools shareholders can use to value their stock investments. A couple 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 top hedge fund managers can outpace the broader indices by a very impressive margin (see the details here).
[caption id="attachment_221556" align="aligncenter" width="400"] Richard Driehaus of Driehaus Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the recent hedge fund action regarding Argo Group International Holdings, Ltd. (NYSE:ARGO).
How are hedge funds trading Argo Group International Holdings, Ltd. (NYSE:ARGO)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in ARGO a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Voce Capital was the largest shareholder of Argo Group International Holdings, Ltd. (NYSE:ARGO), with a stake worth $102 million reported as of the end of September. Trailing Voce Capital was Pzena Investment Management, which amassed a stake valued at $13.5 million. Renaissance Technologies, Capital Returns Management, and GAMCO Investors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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 77.84% of its 13F portfolio. Capital Returns Management is also relatively very bullish on the stock, designating 11.37 percent of its 13F equity portfolio to ARGO.
Because Argo Group International Holdings, Ltd. (NYSE:ARGO) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there was a specific group of money managers who were dropping their positions entirely by the end of the first quarter. Intriguingly, Daniel Johnson's Gillson Capital sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $3.9 million in stock. Israel Englander's fund, Millennium Management, also dumped its stock, about $0.6 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Argo Group International Holdings, Ltd. (NYSE:ARGO) but similarly valued. We will take a look at Sasol Limited (NYSE:SSL), Mueller Water Products, Inc. (NYSE:MWA), McGrath RentCorp (NASDAQ:MGRC), and Employers Holdings, Inc. (NYSE:EIG). This group of stocks' market caps are closest to ARGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSL,9,4982,2 MWA,20,180904,0 MGRC,20,90738,0 EIG,10,52392,-5 Average,14.75,82254,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $138 million in ARGO's case. Mueller Water Products, Inc. (NYSE:MWA) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately ARGO wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ARGO were disappointed as the stock returned -7.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.