The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards The Allstate Corporation (NYSE:ALL), and what that likely means for the prospects of the company and its stock.
Is The Allstate Corporation (NYSE:ALL) the right investment to pursue these days? Investors who are in the know are buying. The number of bullish hedge fund bets improved by 2 in recent months. Our calculations also showed that ALL isn't among the 30 most popular stocks among hedge funds.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's go over the fresh hedge fund action surrounding The Allstate Corporation (NYSE:ALL).
How have hedgies been trading The Allstate Corporation (NYSE:ALL)?
At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALL over the last 15 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in The Allstate Corporation (NYSE:ALL), which was worth $581.7 million at the end of the first quarter. On the second spot was Two Sigma Advisors which amassed $217.8 million worth of shares. Moreover, GLG Partners, Viking Global, and D E Shaw were also bullish on The Allstate Corporation (NYSE:ALL), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, initiated the most outsized position in The Allstate Corporation (NYSE:ALL). Viking Global had $145.3 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $37 million position during the quarter. The other funds with new positions in the stock are Sander Gerber's Hudson Bay Capital Management, Peter Seuss's Prana Capital Management, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..
Let's also examine hedge fund activity in other stocks similar to The Allstate Corporation (NYSE:ALL). We will take a look at LyondellBasell Industries NV (NYSE:LYB), Welltower Inc. (NYSE:WELL), General Mills, Inc. (NYSE:GIS), and Dollar General Corp. (NYSE:DG). All of these stocks' market caps match ALL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LYB,36,1695047,-1 WELL,23,810807,6 GIS,32,511389,-5 DG,31,1121114,1 Average,30.5,1034589,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $1035 million. That figure was $1776 million in ALL's case. LyondellBasell Industries NV (NYSE:LYB) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 23 bullish hedge fund positions. The Allstate Corporation (NYSE:ALL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on ALL as the stock returned 2.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.