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Is Voya Financial Inc (NYSE:VOYA) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Voya Financial Inc (NYSE:VOYA) investors should be aware of a decrease in enthusiasm from smart money recently. Our calculations also showed that VOYA 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.
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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager 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 fresh hedge fund action surrounding Voya Financial Inc (NYSE:VOYA).
What does smart money think about Voya Financial Inc (NYSE:VOYA)?
At Q2's end, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VOYA over the last 16 quarters. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
[caption id="attachment_758454" align="aligncenter" width="450"]
James Dondero of Highland Capital Management[/caption]
The largest stake in Voya Financial Inc (NYSE:VOYA) was held by Pzena Investment Management, which reported holding $382.9 million worth of stock at the end of March. It was followed by Samlyn Capital with a $123.9 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Balyasny Asset Management.
Judging by the fact that Voya Financial Inc (NYSE:VOYA) has faced falling interest from the smart money, logic holds that there lies a certain "tier" of funds who sold off their full holdings in the second quarter. Intriguingly, Robert Pohly's Samlyn Capital said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, comprising close to $50.9 million in stock, and Bain Capital's Brookside Capital was right behind this move, as the fund said goodbye to about $35.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Voya Financial Inc (NYSE:VOYA) but similarly valued. These stocks are US Foods Holding Corp. (NYSE:USFD), Gildan Activewear Inc (NYSE:GIL), News Corp (NASDAQ:NWSA), and Fortune Brands Home & Security Inc (NYSE:FBHS). All of these stocks' market caps resemble VOYA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USFD,39,1399158,-1 GIL,24,551244,-3 NWSA,23,351093,2 FBHS,31,642699,2 Average,29.25,736049,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $736 million. That figure was $1324 million in VOYA's case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWSA) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Voya Financial Inc (NYSE:VOYA) 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 VOYA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VOYA were disappointed as the stock returned -1.3% 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.
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