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In this article we will take a look at whether hedge funds think RenaissanceRe Holdings Ltd. (NYSE:RNR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is RenaissanceRe Holdings Ltd. (NYSE:RNR) a buy right now? Money managers were betting on the stock. The number of long hedge fund positions went up by 1 lately. RenaissanceRe Holdings Ltd. (NYSE:RNR) was in 31 hedge funds' portfolios at the end of June. The all time high for this statistic is 41. Our calculations also showed that RNR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 30 hedge funds in our database with RNR holdings at the end of March.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Stuart Zimmer of Zimmer Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. With all of this in mind let's take a look at the fresh hedge fund action encompassing RenaissanceRe Holdings Ltd. (NYSE:RNR).
Do Hedge Funds Think RNR Is A Good Stock To Buy Now?
At second quarter's end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RNR over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brian Ashford-Russell and Tim Woolley's Polar Capital has the largest position in RenaissanceRe Holdings Ltd. (NYSE:RNR), worth close to $128.8 million, accounting for 0.6% of its total 13F portfolio. On Polar Capital's heels is Diamond Hill Capital, managed by Ric Dillon, which holds a $56.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Gavin M. Abrams's Abrams Bison Investments, Cliff Asness's AQR Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position BlueMar Capital Management allocated the biggest weight to RenaissanceRe Holdings Ltd. (NYSE:RNR), around 4.98% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, designating 3.52 percent of its 13F equity portfolio to RNR.
Now, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the biggest position in RenaissanceRe Holdings Ltd. (NYSE:RNR). Millennium Management had $18.2 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $4.5 million position during the quarter. The other funds with new positions in the stock are Gregg Moskowitz's Interval Partners, Stuart J. Zimmer's Zimmer Partners, and Paul Tudor Jones's Tudor Investment Corp.
Let's now take a look at hedge fund activity in other stocks similar to RenaissanceRe Holdings Ltd. (NYSE:RNR). We will take a look at Olin Corporation (NYSE:OLN), Upwork Inc. (NASDAQ:UPWK), IAA, Inc. (NYSE:IAA), Gildan Activewear Inc (NYSE:GIL), The New York Times Company (NYSE:NYT), The AZEK Company Inc. (NYSE:AZEK), and Woori Financial Group Inc. (NYSE:WF). This group of stocks' market values are closest to RNR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OLN,37,1325786,3 UPWK,26,427800,-6 IAA,33,829694,-2 GIL,19,726018,2 NYT,48,2224644,0 AZEK,37,407782,8 WF,2,3694,0 Average,28.9,849345,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $849 million. That figure was $446 million in RNR's case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 2 bullish hedge fund positions. RenaissanceRe Holdings Ltd. (NYSE:RNR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RNR is 60.2. 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 positive signal but 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately RNR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on RNR were disappointed as the stock returned -0.4% since the end of June (through 10/15) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.