We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article, we look at what those funds think of Everest Re Group Ltd (NYSE:RE) based on that data.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's check out the recent hedge fund action encompassing Everest Re Group Ltd (NYSE:RE).
Hedge fund activity in Everest Re Group Ltd (NYSE:RE)
At Q4's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 93% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RE over the last 14 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 Insider Monkey's hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Everest Re Group Ltd (NYSE:RE). AQR Capital Management has a $271.6 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is GLG Partners, managed by Noam Gottesman, which holds a $37.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise Jim Simons's Renaissance Technologies, Brian Ashford-Russell and Tim Woolley's Polar Capital and Dmitry Balyasny's Balyasny Asset Management.
As aggregate interest increased, some big names were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized call position in Everest Re Group Ltd (NYSE:RE). Balyasny Asset Management had $21.8 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $6 million investment in the stock during the quarter. The following funds were also among the new RE investors: Gregg Moskowitz's Interval Partners, Michael Kharitonov and Jon David McAuliffe's Voleon Capital, and John Brandmeyer's Cognios Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Everest Re Group Ltd (NYSE:RE) but similarly valued. We will take a look at TechnipFMC plc (NYSE:FTI), Lennox International Inc. (NYSE:LII), NVR, Inc. (NYSE:NVR), and Reinsurance Group of America Inc (NYSE:RGA). This group of stocks' market caps match RE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTI,21,428723,-2 LII,24,213167,1 NVR,31,830929,6 RGA,27,566098,6 Average,25.75,509729,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $510 million. That figure was $447 million in RE's case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand TechnipFMC plc (NYSE:FTI) is the least popular one with only 21 bullish hedge fund positions. Everest Re Group Ltd (NYSE:RE) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately RE wasn't in this group. Hedge funds that bet on RE were disappointed as the stock returned 1.2% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.