In this article we will check out the progression of hedge fund sentiment towards Assurant, Inc. (NYSE:AIZ) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Assurant, Inc. (NYSE:AIZ) undervalued? Money managers are getting more optimistic. The number of bullish hedge fund positions rose by 8 in recent months. Our calculations also showed that AIZ isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AIZ was in 33 hedge funds' portfolios at the end of the first quarter of 2020. There were 25 hedge funds in our database with AIZ holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26082" align="aligncenter" width="399"] Andreas Halvorsen of Viking Global[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action surrounding Assurant, Inc. (NYSE:AIZ).
What have hedge funds been doing with Assurant, Inc. (NYSE:AIZ)?
Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in AIZ a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Viking Global was the largest shareholder of Assurant, Inc. (NYSE:AIZ), with a stake worth $223.6 million reported as of the end of September. Trailing Viking Global was Lyrical Asset Management, which amassed a stake valued at $149.1 million. Samlyn Capital, AQR Capital Management, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Strycker View Capital allocated the biggest weight to Assurant, Inc. (NYSE:AIZ), around 17.09% of its 13F portfolio. Prana Capital Management is also relatively very bullish on the stock, dishing out 4.27 percent of its 13F equity portfolio to AIZ.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Assurant, Inc. (NYSE:AIZ). Citadel Investment Group had $28.7 million invested in the company at the end of the quarter. Peter Seuss's Prana Capital Management also made a $14.7 million investment in the stock during the quarter. The other funds with brand new AIZ positions are Gregg Moskowitz's Interval Partners, Donald Sussman's Paloma Partners, and D. E. Shaw's D E Shaw.
Let's check out hedge fund activity in other stocks similar to Assurant, Inc. (NYSE:AIZ). These stocks are Alteryx, Inc. (NYSE:AYX), Universal Display Corporation (NASDAQ:OLED), PPD, Inc. (NASDAQ:PPD), and OGE Energy Corp. (NYSE:OGE). This group of stocks' market values are similar to AIZ's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AYX,43,1019690,-1 OLED,24,222953,-7 PPD,27,512293,27 OGE,21,215864,4 Average,28.75,492700,5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $493 million. That figure was $783 million in AIZ's case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand OGE Energy Corp. (NYSE:OGE) is the least popular one with only 21 bullish hedge fund positions. Assurant, Inc. (NYSE:AIZ) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately AIZ wasn't nearly as popular as these 10 stocks and hedge funds that were betting on AIZ were disappointed as the stock returned -0.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.