We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Stewart Information Services Corporation (NYSE:STC).
Is Stewart Information Services Corporation (NYSE:STC) a healthy stock for your portfolio? Prominent investors are becoming less hopeful. The number of bullish hedge fund bets dropped by 4 in recent months. Our calculations also showed that STC isn't among the 30 most popular stocks among hedge funds (see the video below). STC was in 13 hedge funds' portfolios at the end of the second quarter of 2019. There were 17 hedge funds in our database with STC holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, Our researchers hone in on the crème de la crème of this group, approximately 750 funds. It is estimated that this group of investors command the majority of the hedge fund industry's total asset base, and by keeping track of their best picks, Insider Monkey has determined numerous investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
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. We're going to review the latest hedge fund action regarding Stewart Information Services Corporation (NYSE:STC).
How have hedgies been trading Stewart Information Services Corporation (NYSE:STC)?
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards STC over the last 16 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Magnetar Capital held the most valuable stake in Stewart Information Services Corporation (NYSE:STC), which was worth $38.6 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $32.8 million worth of shares. Moreover, Paulson & Co, Millennium Management, and Springbok Capital were also bullish on Stewart Information Services Corporation (NYSE:STC), allocating a large percentage of their portfolios to this stock.
Since Stewart Information Services Corporation (NYSE:STC) has faced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds that slashed their full holdings last quarter. Intriguingly, Matthew Mark's Jet Capital Investors said goodbye to the largest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $5.5 million in stock, and Nancy Havens-Hasty's Havens Advisors was right behind this move, as the fund dumped about $1.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Stewart Information Services Corporation (NYSE:STC). These stocks are Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS), Bain Capital Specialty Finance, Inc. (NYSE:BCSF), Twist Bioscience Corporation (NASDAQ:TWST), and Mesa Laboratories, Inc. (NASDAQ:MLAB). This group of stocks' market caps are closest to STC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VLRS,7,105923,-3 BCSF,5,32152,3 TWST,9,70227,6 MLAB,8,54809,-2 Average,7.25,65778,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $121 million in STC's case. Twist Bioscience Corporation (NASDAQ:TWST) is the most popular stock in this table. On the other hand Bain Capital Specialty Finance, Inc. (NYSE:BCSF) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Stewart Information Services Corporation (NYSE:STC) is more popular among hedge funds. 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. Unfortunately STC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on STC were disappointed as the stock returned -3.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.