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Should I Avoid The Allstate Corporation (ALL)?

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·5 min read
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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards The Allstate Corporation (NYSE:ALL).

Is The Allstate Corporation (NYSE:ALL) going to take off soon? Money managers were taking a bearish view. The number of long hedge fund bets were cut by 6 lately. The Allstate Corporation (NYSE:ALL) was in 27 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 48. Our calculations also showed that ALL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks 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. With all of this in mind we're going to analyze the key hedge fund action encompassing The Allstate Corporation (NYSE:ALL).

Peter Rathjens Arrowstreet Capital 394
Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

Do Hedge Funds Think ALL Is A Good Stock To Buy Now?

At Q3's end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in ALL a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in The Allstate Corporation (NYSE:ALL). AQR Capital Management has a $377.1 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Point State Capital, managed by Zach Schreiber, which holds a $220.1 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Israel Englander's Millennium Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Point State Capital allocated the biggest weight to The Allstate Corporation (NYSE:ALL), around 3.67% of its 13F portfolio. Point State Capital is also relatively very bullish on the stock, earmarking 1.06 percent of its 13F equity portfolio to ALL.

Due to the fact that The Allstate Corporation (NYSE:ALL) has faced falling interest from the smart money, logic holds that there were a few hedgies who were dropping their full holdings in the third quarter. Intriguingly, Peter Seuss's Prana Capital Management dumped the biggest investment of the 750 funds monitored by Insider Monkey, worth an estimated $19.8 million in stock. Gregg Moskowitz's fund, Interval Partners, also dumped its stock, about $9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds in the third quarter.

Let's now review hedge fund activity in other stocks similar to The Allstate Corporation (NYSE:ALL). We will take a look at DiDi Global Inc. (NYSE:DIDI), Manulife Financial Corporation (NYSE:MFC), Xilinx, Inc. (NASDAQ:XLNX), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Banco Bradesco SA (NYSE:BBD), Nutrien Ltd. (NYSE:NTR), and Hilton Worldwide Holdings Inc (NYSE:HLT). This group of stocks' market caps match ALL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DIDI,15,701653,-31 MFC,18,351002,0 XLNX,62,4541236,3 ERIC,21,227446,2 BBD,13,228299,-5 NTR,30,853049,2 HLT,44,5364120,-1 Average,29,1752401,-4.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1752 million. That figure was $821 million in ALL's case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand Banco Bradesco SA (NYSE:BBD) is the least popular one with only 13 bullish hedge fund positions. The Allstate Corporation (NYSE:ALL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALL is 30.2. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately ALL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ALL investors were disappointed as the stock returned -14.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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