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 873 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 June 30th. In this article we look at what those investors think of Ally Financial Inc (NYSE:ALLY).
Is Ally Financial Inc (NYSE:ALLY) a buy right now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund positions advanced by 3 lately. Ally Financial Inc (NYSE:ALLY) was in 54 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 57. Our calculations also showed that ALLY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Howard Marks of Oaktree Capital Management
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Do Hedge Funds Think ALLY Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 54 hedge funds with a bullish position in ALLY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Ally Financial Inc (NYSE:ALLY), with a stake worth $433.4 million reported as of the end of June. Trailing Arrowstreet Capital was Oaktree Capital Management, which amassed a stake valued at $342.6 million. Platinum Asset Management, Holocene Advisors, and Punch Card 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 Punch Card Capital allocated the biggest weight to Ally Financial Inc (NYSE:ALLY), around 43.2% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, dishing out 7.87 percent of its 13F equity portfolio to ALLY.
Now, key hedge funds have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, initiated the most valuable position in Ally Financial Inc (NYSE:ALLY). Laurion Capital Management had $14.3 million invested in the company at the end of the quarter. Jason Mudrick’s Mudrick Capital Management also initiated a $7.5 million position during the quarter. The other funds with brand new ALLY positions are Sander Gerber’s Hudson Bay Capital Management, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ally Financial Inc (NYSE:ALLY) but similarly valued. We will take a look at SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Tyler Technologies, Inc. (NYSE:TYL), Catalent Inc (NYSE:CTLT), Pool Corporation (NASDAQ:POOL), PagSeguro Digital Ltd. (NYSE:PAGS), Genuine Parts Company (NYSE:GPC), and NetApp Inc. (NASDAQ:NTAP). This group of stocks’ market caps match ALLY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSNC | 49 | 2568906 | -5 |
| TYL | 33 | 731035 | 5 |
| CTLT | 40 | 870986 | 11 |
| POOL | 40 | 1025705 | -1 |
| PAGS | 40 | 2390344 | 7 |
| GPC | 29 | 418026 | 3 |
| NTAP | 31 | 437722 | 5 |
| Average | 37.4 | 1206103 | 3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1206 million. That figure was $2432 million in ALLY’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Ally Financial Inc (NYSE:ALLY) is more popular among hedge funds. Our overall hedge fund sentiment score for ALLY is 86.4. 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 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 returned 22.9% in 2021 through October 1st but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on ALLY as the stock returned 4.7% since the end of June (through 10/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Ally Financial Inc. (NYSE:ALLY)
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Disclosure: None. This article was originally published at Insider Monkey.
