The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Aon plc (NYSE:AON)?
Is Aon plc (NYSE:AON) a buy here? Money managers are getting less bullish. The number of long hedge fund bets shrunk by 4 in recent months. Our calculations also showed that AON isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_364853" align="aligncenter" width="397"] William Von Mueffling of Cantillon Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to go over the recent hedge fund action regarding Aon plc (NYSE:AON).
How are hedge funds trading Aon plc (NYSE:AON)?
At the end of the first quarter, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AON over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Aon plc (NYSE:AON) was held by Eagle Capital Management, which reported holding $971.3 million worth of stock at the end of September. It was followed by Viking Global with a $378 million position. Other investors bullish on the company included Cantillon Capital Management, BlueSpruce Investments, and Iridian Asset Management. In terms of the portfolio weights assigned to each position BloombergSen allocated the biggest weight to Aon plc (NYSE:AON), around 9.48% of its 13F portfolio. Night Owl Capital Management is also relatively very bullish on the stock, earmarking 6.22 percent of its 13F equity portfolio to AON.
Because Aon plc (NYSE:AON) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few funds that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Boykin Curry's Eagle Capital Management cut the biggest position of all the hedgies followed by Insider Monkey, comprising about $837.9 million in stock. Brian Ashford-Russell and Tim Woolley's fund, Polar Capital, also sold off its stock, about $69.9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Aon plc (NYSE:AON). These stocks are Dollar General Corp. (NYSE:DG), Ferrari N.V. (NYSE:RACE), Norfolk Southern Corp. (NYSE:NSC), and BCE Inc. (NYSE:BCE). This group of stocks' market caps are similar to AON's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DG,60,2102704,10 RACE,29,1729509,-7 NSC,51,1172825,-1 BCE,13,204550,-6 Average,38.25,1302397,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.25 hedge funds with bullish positions and the average amount invested in these stocks was $1302 million. That figure was $2705 million in AON's case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand BCE Inc. (NYSE:BCE) is the least popular one with only 13 bullish hedge fund positions. Aon plc (NYSE:AON) is not the most popular stock in this group but hedge fund interest is still above average. 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on AON, though not to the same extent, as the stock returned 16.6% during the first two months of the second quarter (through May 22nd) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.