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Is RenaissanceRe Holdings Ltd. (RNR) Going to Burn These Hedge Funds?

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about RenaissanceRe Holdings Ltd. (NYSE:RNR) in this article.

Is RenaissanceRe Holdings Ltd. (NYSE:RNR) a healthy stock for your portfolio? Hedge funds were taking a bearish view. The number of bullish hedge fund bets were cut by 9 recently. RenaissanceRe Holdings Ltd. (NYSE:RNR) was in 30 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that RNR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the 21st century investor’s toolkit there are numerous formulas market participants have at their disposal to value publicly traded companies. A duo of the most underrated formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outperform the market by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Robert Pohly of Samlyn Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a peek at the new hedge fund action regarding RenaissanceRe Holdings Ltd. (NYSE:RNR).

Do Hedge Funds Think RNR Is A Good Stock To Buy Now?

At first quarter's end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in RNR 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.

Is RNR A Good Stock To Buy?
Is RNR A Good Stock To Buy?

Among these funds, Polar Capital held the most valuable stake in RenaissanceRe Holdings Ltd. (NYSE:RNR), which was worth $114.3 million at the end of the fourth quarter. On the second spot was Diamond Hill Capital which amassed $64.4 million worth of shares. Abrams Bison Investments, AQR Capital Management, and Samlyn Capital 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 BlueMar Capital Management allocated the biggest weight to RenaissanceRe Holdings Ltd. (NYSE:RNR), around 5.63% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, dishing out 3.95 percent of its 13F equity portfolio to RNR.

Since RenaissanceRe Holdings Ltd. (NYSE:RNR) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of money managers who sold off their entire stakes heading into Q2. At the top of the heap, Steve Cohen's Point72 Asset Management dropped the largest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $39.8 million in stock. Israel Englander's fund, Millennium Management, also dropped its stock, about $20.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 9 funds heading into Q2.

Let's now take a look at hedge fund activity in other stocks similar to RenaissanceRe Holdings Ltd. (NYSE:RNR). These stocks are Knight-Swift Transportation Holdings Inc. (NYSE:KNX), DXC Technology Company (NYSE:DXC), Syneos Health, Inc. (NASDAQ:SYNH), Federal Realty Investment Trust (NYSE:FRT), Voya Financial Inc (NYSE:VOYA), Luminar Technologies, Inc. (NASDAQ:LAZR), and ITT Inc. (NYSE:ITT). This group of stocks' market valuations resemble RNR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KNX,25,341454,-9 DXC,28,1057642,-11 SYNH,28,460253,-1 FRT,16,43276,-1 VOYA,42,1031020,-2 LAZR,12,39243,-13 ITT,18,264004,-10 Average,24.1,462413,-6.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $462 million. That figure was $471 million in RNR's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Luminar Technologies, Inc. (NASDAQ:LAZR) is the least popular one with only 12 bullish hedge fund positions. RenaissanceRe Holdings Ltd. (NYSE:RNR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RNR is 48. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately RNR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on RNR were disappointed as the stock returned -6.9% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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