- Oops!Something went wrong.Please try again later.
In this article we will check out the progression of hedge fund sentiment towards Employers Holdings, Inc. (NYSE:EIG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is EIG a good stock to buy now? Hedge fund interest in Employers Holdings, Inc. (NYSE:EIG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EIG 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as DHT Holdings Inc (NYSE:DHT), Cardtronics plc (NASDAQ:CATM), and Dyne Therapeutics, Inc. (NASDAQ:DYN) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are over 8000 funds in operation today, Our experts hone in on the masters of this group, approximately 850 funds. It is estimated that this group of investors preside over most of the smart money's total capital, and by following their unrivaled equity investments, Insider Monkey has uncovered numerous investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
David Siegel of Two Sigma Advisors
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. Keeping this in mind let's take a glance at the key hedge fund action encompassing Employers Holdings, Inc. (NYSE:EIG).
Do Hedge Funds Think EIG Is A Good Stock To Buy Now?
At Q3's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in EIG over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Employers Holdings, Inc. (NYSE:EIG), worth close to $22.8 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $7.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Cliff Asness's AQR Capital Management, John Overdeck and David Siegel's Two Sigma Advisors and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Employers Holdings, Inc. (NYSE:EIG), around 0.07% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to EIG.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Engineers Gate Manager. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Balyasny Asset Management).
Let's also examine hedge fund activity in other stocks similar to Employers Holdings, Inc. (NYSE:EIG). We will take a look at DHT Holdings Inc (NYSE:DHT), Cardtronics plc (NASDAQ:CATM), Dyne Therapeutics, Inc. (NASDAQ:DYN), Denbury Inc. (NYSE:DEN), Warrior Met Coal Inc. (NYSE:HCC), CEVA, Inc. (NASDAQ:CEVA), and Welbilt, Inc. (NYSE:WBT). This group of stocks' market values are similar to EIG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DHT,24,129282,6 CATM,15,247410,-6 DYN,23,219240,23 DEN,9,298169,9 HCC,26,199815,5 CEVA,12,44479,-4 WBT,24,160591,2 Average,19,185569,5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $52 million in EIG's case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Denbury Inc. (NYSE:DEN) is the least popular one with only 9 bullish hedge fund positions. Employers Holdings, Inc. (NYSE:EIG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EIG is 33.8. 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. 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 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 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately EIG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EIG investors were disappointed as the stock returned 7.3% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Get real-time email alerts: Follow Employers Holdings Inc. (NYSE:EIG)
Disclosure: None. This article was originally published at Insider Monkey.