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Is Stewart Information Services Corp (NYSE:STC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is STC a good stock to buy now? The best stock pickers were getting more bullish. The number of bullish hedge fund bets went up by 4 recently. Stewart Information Services Corp (NYSE:STC) was in 19 hedge funds' portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that STC 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 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.
Charles Clough of Clough Capital Partners
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 review the fresh hedge fund action regarding Stewart Information Services Corp (NYSE:STC).
Do Hedge Funds Think STC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in STC 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the number one position in Stewart Information Services Corp (NYSE:STC). Renaissance Technologies has a $47.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which holds a $15.6 million position; 0.2% of its 13F portfolio is allocated to the company. Other peers with similar optimism consist of Ravi Chopra's Azora Capital, Charles Clough's Clough Capital Partners and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to Stewart Information Services Corp (NYSE:STC), around 1.11% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, earmarking 0.63 percent of its 13F equity portfolio to STC.
As one would reasonably expect, specific money managers were breaking ground themselves. Azora Capital, managed by Ravi Chopra, created the biggest position in Stewart Information Services Corp (NYSE:STC). Azora Capital had $8.8 million invested in the company at the end of the quarter. Charles Clough's Clough Capital Partners also made a $8.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew L Pinz's Pinz Capital, Noam Gottesman's GLG Partners, and Steve Cohen's Point72 Asset Management.
Let's now take a look at hedge fund activity in other stocks similar to Stewart Information Services Corp (NYSE:STC). These stocks are Helios Technologies, Inc. (NASDAQ:HLIO), Intellia Therapeutics, Inc. (NASDAQ:NTLA), Sixth Street Specialty Lending Inc (NYSE:TSLX), Bitauto Hldg Ltd (NYSE:BITA), Steelcase Inc. (NYSE:SCS), NuStar Energy L.P. (NYSE:NS), and ICF International Inc (NASDAQ:ICFI). All of these stocks' market caps are closest to STC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HLIO,8,55418,-1 NTLA,15,62356,-2 TSLX,11,75906,1 BITA,16,158755,0 SCS,22,93278,0 NS,4,8446,-1 ICFI,12,32049,1 Average,12.6,69458,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $104 million in STC's case. Steelcase Inc. (NYSE:SCS) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 4 bullish hedge fund positions. Stewart Information Services Corp (NYSE:STC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STC is 79.2. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on STC, though not to the same extent, as the stock returned 9.2% since Q3 (through December 14th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.