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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards The Travelers Companies, Inc. (NYSE:TRV).
The Travelers Companies, Inc. (NYSE:TRV) investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. TRV was in 29 hedge funds' portfolios at the end of the first quarter of 2020. There were 39 hedge funds in our database with TRV holdings at the end of the previous quarter. Our calculations also showed that TRV 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are perceived as slow, old investment vehicles of the past. While there are over 8000 funds in operation at present, Our experts look at the elite of this club, approximately 850 funds. These hedge fund managers oversee the majority of all hedge funds' total capital, and by tailing their finest investments, Insider Monkey has revealed several investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_30600" align="aligncenter" width="394"] Bruce Kovner of Caxton Associates LP[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 latest hedge fund action surrounding The Travelers Companies, Inc. (NYSE:TRV).
How are hedge funds trading The Travelers Companies, Inc. (NYSE:TRV)?
Heading into the second quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -26% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TRV over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in The Travelers Companies, Inc. (NYSE:TRV), which was worth $228.4 million at the end of the third quarter. On the second spot was Polar Capital which amassed $67.1 million worth of shares. Two Sigma Advisors, Markel Gayner Asset Management, and Balyasny Asset 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 Meru Capital allocated the biggest weight to The Travelers Companies, Inc. (NYSE:TRV), around 3.16% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, dishing out 0.72 percent of its 13F equity portfolio to TRV.
Since The Travelers Companies, Inc. (NYSE:TRV) has faced declining sentiment from hedge fund managers, logic holds that there was a specific group of money managers who were dropping their full holdings by the end of the first quarter. Intriguingly, Warren Buffett's Berkshire Hathaway dumped the largest position of the "upper crust" of funds followed by Insider Monkey, valued at an estimated $42.8 million in stock. Anand Parekh's fund, Alyeska Investment Group, also cut its stock, about $33.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 10 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as The Travelers Companies, Inc. (NYSE:TRV) but similarly valued. These stocks are DuPont de Nemours Inc (NYSE:DD), Hormel Foods Corporation (NYSE:HRL), HP Inc. (NYSE:HPQ), and Alcon Inc. (NYSE:ALC). This group of stocks' market caps are closest to TRV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DD,54,2411525,-14 HRL,28,276267,5 HPQ,43,2180945,-6 ALC,25,605394,1 Average,37.5,1368533,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $1369 million. That figure was $482 million in TRV's case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Alcon Inc. (NYSE:ALC) is the least popular one with only 25 bullish hedge fund positions. The Travelers Companies, Inc. (NYSE:TRV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 and surpassed the market by 13.2 percentage points. Unfortunately TRV wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TRV investors were disappointed as the stock returned 7.7% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.