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Hedge Funds Are Nibbling On The Travelers Companies Inc (TRV)

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In this article you are going to find out whether hedge funds think The Travelers Companies Inc (NYSE:TRV) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

The Travelers Companies Inc (NYSE:TRV) investors should be aware of an increase in hedge fund sentiment of late. Travelers Companies Inc (NYSE:TRV) was in 35 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that TRV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are dozens of gauges shareholders can use to grade publicly traded companies. Some of the best gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the broader indices by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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 battery 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. Keeping this in mind we're going to take a glance at the recent hedge fund action surrounding The Travelers Companies Inc (NYSE:TRV).

Do Hedge Funds Think TRV Is A Good Stock To Buy Now?

At the end of March, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRV over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, AQR Capital Management was the largest shareholder of The Travelers Companies Inc (NYSE:TRV), with a stake worth $152.3 million reported as of the end of March. Trailing AQR Capital Management was Polar Capital, which amassed a stake valued at $111.9 million. Adage Capital Management, Schonfeld Strategic Advisors, and Citadel Investment Group 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 Te Ahumairangi Investment Management allocated the biggest weight to The Travelers Companies Inc (NYSE:TRV), around 0.99% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, designating 0.73 percent of its 13F equity portfolio to TRV.

As industrywide interest jumped, some big names have been driving this bullishness. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), established the largest call position in The Travelers Companies Inc (NYSE:TRV). Schonfeld Strategic Advisors had $18.7 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors also initiated a $5.6 million position during the quarter. The other funds with brand new TRV positions are Peter Seuss's Prana Capital Management, Donald Sussman's Paloma Partners, and Benjamin A. Smith's Laurion Capital Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as The Travelers Companies Inc (NYSE:TRV) but similarly valued. We will take a look at DocuSign, Inc. (NASDAQ:DOCU), Synopsys, Inc. (NASDAQ:SNPS), Kinder Morgan Inc (NYSE:KMI), General Mills, Inc. (NYSE:GIS), Simon Property Group, Inc (NYSE:SPG), Aptiv PLC (NYSE:APTV), and Centene Corporation (NYSE:CNC). This group of stocks' market values are similar to TRV's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DOCU,60,3232494,-7 SNPS,34,1655845,-6 KMI,38,1194030,-4 GIS,31,797434,-8 SPG,31,506264,-1 APTV,50,1417793,6 CNC,53,2696678,-3 Average,42.4,1642934,-3.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.4 hedge funds with bullish positions and the average amount invested in these stocks was $1643 million. That figure was $409 million in TRV's case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand General Mills, Inc. (NYSE:GIS) is the least popular one with only 31 bullish hedge fund positions. The Travelers Companies Inc (NYSE:TRV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRV is 39.8. 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 negative signal and 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately TRV wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TRV investors were disappointed as the stock returned 1.4% since the end of March (through 6/25) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.