Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Voya Financial Inc (NYSE:VOYA).
Voya Financial Inc (NYSE:VOYA) was in 43 hedge funds' portfolios at the end of the fourth quarter of 2019. VOYA shareholders have witnessed an increase in hedge fund interest in recent months. There were 40 hedge funds in our database with VOYA holdings at the end of the previous quarter. Our calculations also showed that VOYA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26575" align="aligncenter" width="400"] Louis Bacon Moore of Moore Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind we're going to take a peek at the fresh hedge fund action regarding Voya Financial Inc (NYSE:VOYA).
How have hedgies been trading Voya Financial Inc (NYSE:VOYA)?
Heading into the first quarter of 2020, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. By comparison, 38 hedge funds held shares or bullish call options in VOYA a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Voya Financial Inc (NYSE:VOYA) was held by Pzena Investment Management, which reported holding $347 million worth of stock at the end of September. It was followed by Samlyn Capital with a $141.1 million position. Other investors bullish on the company included D E Shaw, Millennium Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Capital Returns Management allocated the biggest weight to Voya Financial Inc (NYSE:VOYA), around 6.25% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 5.04 percent of its 13F equity portfolio to VOYA.
Now, some big names have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, created the most outsized position in Voya Financial Inc (NYSE:VOYA). Moore Global Investments had $18.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $5.1 million position during the quarter. The following funds were also among the new VOYA investors: Ray Dalio's Bridgewater Associates, Kamyar Khajavi's MIK Capital, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Voya Financial Inc (NYSE:VOYA) but similarly valued. These stocks are Zayo Group Holdings Inc (NYSE:ZAYO), The Mosaic Company (NYSE:MOS), HollyFrontier Corporation (NYSE:HFC), and Invesco Ltd. (NYSE:IVZ). This group of 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 ZAYO,52,2277778,-1 MOS,29,695479,10 HFC,30,382980,-1 IVZ,24,252642,-2 Average,33.75,902220,1.5 [/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 $902 million. That figure was $1130 million in VOYA's case. Zayo Group Holdings Inc (NYSE:ZAYO) is the most popular stock in this table. On the other hand Invesco Ltd. (NYSE:IVZ) is the least popular one with only 24 bullish hedge fund positions. Voya Financial Inc (NYSE:VOYA) 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 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 -35.7% 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.