Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Argo Group International Holdings, Ltd. (NASDAQ:AGII) has seen a decrease in hedge fund interest lately. 13 hedge funds that we track were long the stock on September 30. There were 18 hedge funds in our database with AGII holdings at the end of the June quarter. At the end of this article we will also compare AGII to other stocks including Ebix Inc (NASDAQ:EBIX), Dana Holding Corporation (NYSE:DAN), and DineEquity Inc (NYSE:DIN) to get a better sense of its popularity.
Follow Argo Group International Holdings Ltd. (NYSE:ARGO)
Follow Argo Group International Holdings Ltd. (NYSE:ARGO)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What does the smart money think about Argo Group International Holdings, Ltd. (NASDAQ:AGII)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a 28% fall from one quarter earlier, as hedge fund ownership continues to decline. By comparison, 18 hedge funds held shares or bullish call options in AGII heading into this year. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, led by Richard S. Pzena, holds the largest position in Argo Group International Holdings, Ltd. (NASDAQ:AGII). Pzena Investment Management has a $29.7 million position in the stock. The second most bullish fund manager is Millennium Management, founded by Israel Englander, which holds a $26.1 million position. Remaining professional money managers that are bullish encompass Cliff Asness’ AQR Capital Management, David E. Shaw’s D E Shaw, and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cut the largest investment of all the investors tracked by Insider Monkey, comprising close to $3.8 million in stock. Jacob Gottlieb’s fund, Visium Asset Management, also cut its stock, about $2.2 million worth.
Let’s now review hedge fund activity in other stocks similar to Argo Group International Holdings, Ltd. (NASDAQ:AGII). We will take a look at Ebix Inc (NASDAQ:EBIX), Dana Holding Corporation (NYSE:DAN), DineEquity Inc (NYSE:DIN), and Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV). All of these stocks’ market caps match AGII’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBIX | 18 | 163317 | 4 |
| DAN | 26 | 381367 | -1 |
| DIN | 16 | 106871 | 0 |
| EVV | 3 | 4448 | -1 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $102 million in AGII’s case. Dana Holding Corporation (NYSE:DAN) is the most popular stock in this table. On the other hand Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) is the least popular one with only 3 bullish hedge fund positions. Argo Group International Holdings, Ltd. (NASDAQ:AGII) 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. In this regard DAN might be a better candidate to consider taking a long position in.
Disclosure: None
