Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is State Auto Financial Corporation (NASDAQ:STFC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is State Auto Financial Corporation (NASDAQ:STFC) going to take off soon? The best stock pickers were becoming hopeful. The number of bullish hedge fund bets went up by 16 lately. State Auto Financial Corporation (NASDAQ:STFC) was in 21 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that STFC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 5 hedge funds in our database with STFC holdings at the end of June.
Clint Carlson of Carlson Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we're going to take a peek at the latest hedge fund action regarding State Auto Financial Corporation (NASDAQ:STFC).
Do Hedge Funds Think STFC Is A Good Stock To Buy Now?
At third quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 320% from the previous quarter. The graph below displays the number of hedge funds with bullish position in STFC over the last 25 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Alec Litowitz and Ross Laser's Magnetar Capital has the most valuable position in State Auto Financial Corporation (NASDAQ:STFC), worth close to $61.7 million, corresponding to 0.6% of its total 13F portfolio. The second largest stake is held by Robert Emil Zoellner of Alpine Associates, with a $29 million position; 0.9% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish encompass Clint Carlson's Carlson Capital, Noam Gottesman's GLG Partners and James Dondero's Highland Capital Management. In terms of the portfolio weights assigned to each position Highland Capital Management allocated the biggest weight to State Auto Financial Corporation (NASDAQ:STFC), around 2.26% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, earmarking 1.52 percent of its 13F equity portfolio to STFC.
As one would reasonably expect, some big names were breaking ground themselves. Magnetar Capital, managed by Alec Litowitz and Ross Laser, established the most valuable position in State Auto Financial Corporation (NASDAQ:STFC). Magnetar Capital had $61.7 million invested in the company at the end of the quarter. Robert Emil Zoellner's Alpine Associates also initiated a $29 million position during the quarter. The other funds with new positions in the stock are Clint Carlson's Carlson Capital, Noam Gottesman's GLG Partners, and James Dondero's Highland Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as State Auto Financial Corporation (NASDAQ:STFC) but similarly valued. These stocks are Nexgen Energy Ltd. (NYSE:NXE), Forward Air Corporation (NASDAQ:FWRD), SomaLogic Inc. (NASDAQ:SLGC), O-I Glass, Inc. (NYSE:OI), Glaukos Corporation (NYSE:GKOS), First Financial Bancorp (NASDAQ:FFBC), and Hillman Solutions Corp. (NASDAQ:HLMN). This group of stocks' market caps match STFC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXE,19,60570,8 FWRD,15,299767,-4 SLGC,37,647590,37 OI,32,258993,8 GKOS,23,176344,4 FFBC,7,10840,0 HLMN,25,481224,25 Average,22.6,276475,11.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $179 million in STFC's case. SomaLogic Inc. (NASDAQ:SLGC) is the most popular stock in this table. On the other hand First Financial Bancorp (NASDAQ:FFBC) is the least popular one with only 7 bullish hedge fund positions. State Auto Financial Corporation (NASDAQ:STFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STFC is 63.3. 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately STFC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); STFC investors were disappointed as the stock returned 1.6% since the end of September (through 12/31) 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.