The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards RenaissanceRe Holdings Ltd. (NYSE:RNR).
RenaissanceRe Holdings Ltd. (NYSE:RNR) investors should pay attention to a decrease in support from the world's most elite money managers in recent months. Our calculations also showed that RNR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26255" align="aligncenter" width="600"] Louis Navellier of Navellier & Associates[/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 go over the key hedge fund action surrounding RenaissanceRe Holdings Ltd. (NYSE:RNR).
Hedge fund activity in RenaissanceRe Holdings Ltd. (NYSE:RNR)
At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RNR over the last 17 quarters. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in RenaissanceRe Holdings Ltd. (NYSE:RNR), which was worth $176.8 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $140.6 million worth of shares. Polar Capital, Abrams Bison Investments, and Diamond Hill Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to RenaissanceRe Holdings Ltd. (NYSE:RNR), around 8.02% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, setting aside 4.76 percent of its 13F equity portfolio to RNR.
Due to the fact that RenaissanceRe Holdings Ltd. (NYSE:RNR) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who sold off their positions entirely heading into Q4. Intriguingly, Bruce Kovner's Caxton Associates sold off the largest stake of the "upper crust" of funds followed by Insider Monkey, comprising close to $3.6 million in stock, and Matthew Tewksbury's Stevens Capital Management was right behind this move, as the fund said goodbye to about $2.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as RenaissanceRe Holdings Ltd. (NYSE:RNR) but similarly valued. These stocks are Spirit AeroSystems Holdings, Inc. (NYSE:SPR), F5 Networks, Inc. (NASDAQ:FFIV), The Trade Desk, Inc. (NASDAQ:TTD), and Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). This group of stocks' market caps are similar to RNR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPR,36,2062498,5 FFIV,22,1179111,-1 TTD,25,388607,1 IONS,25,379230,7 Average,27,1002362,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1002 million. That figure was $658 million in RNR's case. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is the most popular stock in this table. On the other hand F5 Networks, Inc. (NASDAQ:FFIV) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks RenaissanceRe Holdings Ltd. (NYSE:RNR) is even less popular than FFIV. Hedge funds dodged a bullet by taking a bearish stance towards RNR. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately RNR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); RNR investors were disappointed as the stock returned -2.6% 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.