"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Employers Holdings, Inc. (NYSE:EIG).
Is Employers Holdings, Inc. (NYSE:EIG) the right pick for your portfolio? The smart money is getting less optimistic. The number of bullish hedge fund positions retreated by 2 recently. 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 below for Q2 rankings). EIG was in 14 hedge funds' portfolios at the end of the third quarter of 2019. There were 16 hedge funds in our database with EIG holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are tons of indicators stock market investors have at their disposal to evaluate stocks. A duo of the most under-the-radar indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the broader indices by a healthy margin (see the details here).
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman of GLG Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. Let's take a glance at the latest hedge fund action regarding Employers Holdings, Inc. (NYSE:EIG).
Hedge fund activity in Employers Holdings, Inc. (NYSE:EIG)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EIG over the last 17 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Employers Holdings, Inc. (NYSE:EIG) was held by AQR Capital Management, which reported holding $18.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $18.5 million position. Other investors bullish on the company included GLG Partners, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Employers Holdings, Inc. (NYSE:EIG), around 0.65% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.12 percent of its 13F equity portfolio to EIG.
Since Employers Holdings, Inc. (NYSE:EIG) has faced falling interest from hedge fund managers, we can see that there were a few money managers that slashed their full holdings in the third quarter. Intriguingly, Donald Sussman's Paloma Partners said goodbye to the largest stake of all the hedgies followed by Insider Monkey, valued at about $0.4 million in stock. Brandon Haley's fund, Holocene Advisors, also dumped its stock, about $0.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Employers Holdings, Inc. (NYSE:EIG) but similarly valued. We will take a look at Marcus & Millichap Inc (NYSE:MMI), Oi SA (NYSE:OIBR), Monmouth R.E. Inv. Corp. (NYSE:MNR), and Industrial Logistics Properties Trust (NASDAQ:ILPT). All of these stocks' market caps resemble EIG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MMI,14,111080,2 OIBR,11,291042,-7 MNR,10,73788,-3 ILPT,11,83064,2 Average,11.5,139744,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $140 million. That figure was $76 million in EIG's case. Marcus & Millichap Inc (NYSE:MMI) is the most popular stock in this table. On the other hand Monmouth R.E. Inv. Corp. (NYSE:MNR) is the least popular one with only 10 bullish hedge fund positions. Employers Holdings, Inc. (NYSE:EIG) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EIG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EIG were disappointed as the stock returned -0.9% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.