After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Cna Financial Corporation (NYSE:CNA).
Cna Financial Corporation (NYSE:CNA) has experienced an increase in hedge fund sentiment of late. CNA was in 14 hedge funds' portfolios at the end of the third quarter of 2019. There were 12 hedge funds in our database with CNA positions at the end of the previous quarter. Our calculations also showed that CNA 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' 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 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 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.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/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. We're going to analyze the fresh hedge fund action regarding Cna Financial Corporation (NYSE:CNA).
Hedge fund activity in Cna Financial Corporation (NYSE:CNA)
At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in CNA a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Cna Financial Corporation (NYSE:CNA), with a stake worth $50.5 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $9.6 million. AQR Capital Management, GLG Partners, and Levin Capital Strategies 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 Pacifica Capital Investments allocated the biggest weight to Cna Financial Corporation (NYSE:CNA), around 1.76% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, designating 0.45 percent of its 13F equity portfolio to CNA.
As industrywide interest jumped, key hedge funds have jumped into Cna Financial Corporation (NYSE:CNA) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the most valuable position in Cna Financial Corporation (NYSE:CNA). ExodusPoint Capital had $0.5 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer's PEAK6 Capital Management and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out hedge fund activity in other stocks similar to Cna Financial Corporation (NYSE:CNA). We will take a look at The Liberty SiriusXM Group (NASDAQ:LSXMK), Kansas City Southern (NYSE:KSU), Discovery Communications Inc. (NASDAQ:DISCK), and Burlington Stores Inc (NYSE:BURL). This group of stocks' market values are closest to CNA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSXMK,44,2852514,2 KSU,28,550900,2 DISCK,30,727071,0 BURL,37,1512597,6 Average,34.75,1410771,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.75 hedge funds with bullish positions and the average amount invested in these stocks was $1411 million. That figure was $87 million in CNA's case. The Liberty SiriusXM Group (NASDAQ:LSXMK) is the most popular stock in this table. On the other hand Kansas City Southern (NYSE:KSU) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Cna Financial Corporation (NYSE:CNA) is even less popular than KSU. Hedge funds dodged a bullet by taking a bearish stance towards CNA. 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 CNA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CNA investors were disappointed as the stock returned -8.5% 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.