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How Did Voya Financial Inc (VOYA) Compare Against Top Hedge Fund Stocks in 2019?

Abigail Fisher

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by almost 14 percentage points. That's a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Voya Financial Inc (NYSE:VOYA) a marvelous stock to buy now? Investors who are in the know are in a pessimistic mood. The number of long hedge fund bets retreated by 6 in recent months. Our calculations also showed that VOYA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

[caption id="attachment_26388" align="aligncenter" width="468"] Lee Ainslie of Maverick Capital[/caption]

Lee Ainslie MAVERICK CAPITAL

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to view the fresh hedge fund action surrounding Voya Financial Inc (NYSE:VOYA).

What does smart money think about Voya Financial Inc (NYSE:VOYA)?

At Q3's end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. By comparison, 38 hedge funds held shares or bullish call options in VOYA a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Voya Financial Inc (NYSE:VOYA) was held by Pzena Investment Management, which reported holding $304.3 million worth of stock at the end of September. It was followed by Samlyn Capital with a $120.8 million position. Other investors bullish on the company included Citadel Investment Group, D E Shaw, and Millennium Management. In terms of the portfolio weights assigned to each position Capital Returns Management allocated the biggest weight to Voya Financial Inc (NYSE:VOYA), around 6.86% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 5.3 percent of its 13F equity portfolio to VOYA.

Since Voya Financial Inc (NYSE:VOYA) has experienced a decline in interest from the smart money, logic holds that there were a few funds that slashed their positions entirely in the third quarter. At the top of the heap, Clint Carlson's Carlson Capital said goodbye to the largest position of all the hedgies watched by Insider Monkey, totaling about $40.8 million in stock, and James Parsons's Junto Capital Management was right behind this move, as the fund said goodbye to about $37.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 6 funds in the third quarter.

Let's now take a look at hedge fund activity in other stocks similar to Voya Financial Inc (NYSE:VOYA). These stocks are Liberty Property Trust (NYSE:LPT), Perrigo Company plc (NYSE:PRGO), ServiceMaster Global Holdings Inc (NYSE:SERV), and AptarGroup, Inc. (NYSE:ATR). This group of stocks' market values match VOYA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPT,29,576112,10 PRGO,15,453537,-6 SERV,26,927792,-4 ATR,22,112361,2 Average,23,517451,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $1077 million in VOYA's case. Liberty Property Trust (NYSE:LPT) is the most popular stock in this table. On the other hand Perrigo Company plc (NYSE:PRGO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Voya Financial Inc (NYSE:VOYA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on VOYA as the stock returned 51.2% so far in 2019 (through 12/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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