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Here’s What Hedge Funds Think About W.R. Berkley Corporation (WRB)

Abigail Fisher

We at Insider Monkey have gone over 752 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 September 30th. In this article, we look at what those funds think of W.R. Berkley Corporation (NYSE:WRB) based on that data.

W.R. Berkley Corporation (NYSE:WRB) was in 21 hedge funds' portfolios at the end of September. WRB has experienced a decrease in hedge fund sentiment in recent months. There were 23 hedge funds in our database with WRB positions at the end of the previous quarter. Our calculations also showed that WRB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_26044" align="aligncenter" width="359"] Ken Griffin of Citadel Investment Group[/caption]

Ken Griffin CITADEL INVESTMENT GROUP

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to analyze the fresh hedge fund action surrounding W.R. Berkley Corporation (NYSE:WRB).

Hedge fund activity in W.R. Berkley Corporation (NYSE:WRB)

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in WRB a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in W.R. Berkley Corporation (NYSE:WRB) was held by Polar Capital, which reported holding $89.4 million worth of stock at the end of September. It was followed by AQR Capital Management with a $59.3 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Gillson Capital allocated the biggest weight to W.R. Berkley Corporation (NYSE:WRB), around 1.87% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, earmarking 0.8 percent of its 13F equity portfolio to WRB.

Judging by the fact that W.R. Berkley Corporation (NYSE:WRB) has experienced declining sentiment from hedge fund managers, it's easy to see that there exists a select few hedge funds that slashed their entire stakes heading into Q4. It's worth mentioning that Chuck Royce's Royce & Associates cut the largest stake of the 750 funds monitored by Insider Monkey, worth close to $2 million in stock, and Benjamin A. Smith's Laurion Capital Management was right behind this move, as the fund dumped about $2 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds heading into Q4.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as W.R. Berkley Corporation (NYSE:WRB) but similarly valued. These stocks are The Liberty SiriusXM Group (NASDAQ:LSXMA), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Universal Health Services, Inc. (NYSE:UHS), and Vistra Energy Corp. (NYSE:VST). This group of stocks' market caps are similar to WRB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSXMA,39,1484908,5 CRWD,28,273644,-13 UHS,26,562518,2 VST,42,2382348,3 Average,33.75,1175855,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $1176 million. That figure was $338 million in WRB's case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Universal Health Services, Inc. (NYSE:UHS) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks W.R. Berkley Corporation (NYSE:WRB) is even less popular than UHS. Hedge funds dodged a bullet by taking a bearish stance towards WRB. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WRB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); WRB investors were disappointed as the stock returned -4.7% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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