Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about Safety Insurance Group, Inc. (NASDAQ:SAFT).
Safety Insurance Group, Inc. (NASDAQ:SAFT) was in 10 hedge funds' portfolios at the end of June. SAFT has seen a decrease in activity from the world's largest hedge funds of late. There were 11 hedge funds in our database with SAFT positions at the end of the previous quarter. Our calculations also showed that SAFT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are plenty of tools stock market investors use to analyze stocks. A couple of the most underrated tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best fund managers can beat the broader indices by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the fresh hedge fund action encompassing Safety Insurance Group, Inc. (NASDAQ:SAFT).
What does smart money think about Safety Insurance Group, Inc. (NASDAQ:SAFT)?
At Q2's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in SAFT a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Safety Insurance Group, Inc. (NASDAQ:SAFT), with a stake worth $35.8 million reported as of the end of March. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $4.4 million. Prospector Partners, PEAK6 Capital Management, and Winton Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Since Safety Insurance Group, Inc. (NASDAQ:SAFT) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few money managers that elected to cut their entire stakes in the second quarter. At the top of the heap, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dropped the biggest position of the "upper crust" of funds monitored by Insider Monkey, worth close to $0.1 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund dropped about $0 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds in the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Safety Insurance Group, Inc. (NASDAQ:SAFT) but similarly valued. We will take a look at Brinker International, Inc. (NYSE:EAT), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), SPX Corporation (NYSE:SPXC), and Tri-Continental Corporation (NYSE:TY). This group of stocks' market caps match SAFT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EAT,28,238224,-1 KLIC,17,229037,0 SPXC,16,82178,-3 TY,1,1220,-1 Average,15.5,137665,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $48 million in SAFT's case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand Tri-Continental Corporation (NYSE:TY) is the least popular one with only 1 bullish hedge fund positions. Safety Insurance Group, Inc. (NASDAQ:SAFT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on SAFT as the stock returned 7.5% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.