Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of RenaissanceRe Holdings Ltd. (NYSE:RNR) based on that data and determine whether they were really smart about the stock.
RenaissanceRe Holdings Ltd. (NYSE:RNR) was in 41 hedge funds' portfolios at the end of June. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. RNR shareholders have witnessed an increase in support from the world's most elite money managers in recent months. There were 30 hedge funds in our database with RNR positions at the end of the first quarter. Our calculations also showed that RNR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Louis Bacon Moore of Moore Capital
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 precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Keeping this in mind we're going to go over the new hedge fund action surrounding RenaissanceRe Holdings Ltd. (NYSE:RNR).
How are hedge funds trading RenaissanceRe Holdings Ltd. (NYSE:RNR)?
At second quarter's end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 37% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in RNR a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Point72 Asset Management was the largest shareholder of RenaissanceRe Holdings Ltd. (NYSE:RNR), with a stake worth $148 million reported as of the end of September. Trailing Point72 Asset Management was Renaissance Technologies, which amassed a stake valued at $138 million. Samlyn Capital, AQR Capital Management, and Polar 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 BlueMar Capital Management allocated the biggest weight to RenaissanceRe Holdings Ltd. (NYSE:RNR), around 7.89% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, earmarking 7.88 percent of its 13F equity portfolio to RNR.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into RenaissanceRe Holdings Ltd. (NYSE:RNR) headfirst. Samlyn Capital, managed by Robert Pohly, initiated the most valuable position in RenaissanceRe Holdings Ltd. (NYSE:RNR). Samlyn Capital had $81.3 million invested in the company at the end of the quarter. Louis Bacon's Moore Global Investments also made a $34.9 million investment in the stock during the quarter. The following funds were also among the new RNR investors: Chuck Royce's Royce & Associates, Ravi Chopra's Azora Capital, and Joe DiMenna's ZWEIG DIMENNA PARTNERS.
Let's now review hedge fund activity in other stocks similar to RenaissanceRe Holdings Ltd. (NYSE:RNR). These stocks are Clarivate Plc (NYSE:CCC), Charles River Laboratories International Inc. (NYSE:CRL), Natura &Co Holding S.A. (NYSE:NTCO), Brookfield Renewable Partners L.P. (NYSE:BEP), Elanco Animal Health Incorporated (NYSE:ELAN), James Hardie Industries plc (NYSE:JHX), and IPG Photonics Corporation (NASDAQ:IPGP). All of these stocks' market caps resemble RNR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCC,45,1300868,17 CRL,41,1050760,5 NTCO,5,85507,-3 BEP,5,30355,2 ELAN,30,212753,4 JHX,5,11376,1 IPGP,30,239086,10 Average,23,418672,5.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $419 million. That figure was $871 million in RNR's case. Clarivate Plc (NYSE:CCC) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 5 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 85. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately RNR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on RNR were disappointed as the stock returned 7.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.