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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of The Hartford Financial Services Group Inc (NYSE:HIG).
Is HIG a good stock to buy now? The best stock pickers were becoming less hopeful. The number of long hedge fund positions were trimmed by 3 lately. The Hartford Financial Services Group Inc (NYSE:HIG) was in 36 hedge funds' portfolios at the end of September. The all time high for this statistic is 51. Our calculations also showed that HIG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 39 hedge funds in our database with HIG holdings at the end of June.
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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's go over the recent hedge fund action encompassing The Hartford Financial Services Group Inc (NYSE:HIG).
Do Hedge Funds Think HIG Is A Good Stock To Buy Now?
At Q3's end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 36 hedge funds held shares or bullish call options in HIG a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Diamond Hill Capital was the largest shareholder of The Hartford Financial Services Group Inc (NYSE:HIG), with a stake worth $230.1 million reported as of the end of September. Trailing Diamond Hill Capital was D E Shaw, which amassed a stake valued at $204.4 million. Citadel Investment Group, Arrowstreet Capital, and AQR 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 Prana Capital Management allocated the biggest weight to The Hartford Financial Services Group Inc (NYSE:HIG), around 3.68% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, dishing out 1.27 percent of its 13F equity portfolio to HIG.
Due to the fact that The Hartford Financial Services Group Inc (NYSE:HIG) has faced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few fund managers who were dropping their positions entirely last quarter. At the top of the heap, Robert Pohly's Samlyn Capital sold off the biggest investment of the 750 funds watched by Insider Monkey, comprising an estimated $59.9 million in stock. Steve Cohen's fund, Point72 Asset Management, also dumped its stock, about $12.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds last quarter.
Let's check out hedge fund activity in other stocks similar to The Hartford Financial Services Group Inc (NYSE:HIG). These stocks are Teradyne, Inc. (NASDAQ:TER), Elanco Animal Health Incorporated (NYSE:ELAN), Tradeweb Markets Inc. (NASDAQ:TW), The J.M. Smucker Company (NYSE:SJM), Darden Restaurants, Inc. (NYSE:DRI), International Flavors & Fragrances Inc (NYSE:IFF), and Essex Property Trust Inc (NYSE:ESS). This group of stocks' market values match HIG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TER,42,1365348,8 ELAN,21,302734,-9 TW,24,297199,-9 SJM,31,763149,-7 DRI,41,1183411,-8 IFF,31,202593,0 ESS,28,549766,0 Average,31.1,666314,-3.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $666 million. That figure was $967 million in HIG's case. Teradyne, Inc. (NASDAQ:TER) is the most popular stock in this table. On the other hand Elanco Animal Health Incorporated (NYSE:ELAN) is the least popular one with only 21 bullish hedge fund positions. The Hartford Financial Services Group Inc (NYSE:HIG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HIG is 58.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on HIG as the stock returned 30.2% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.