Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 30 stock picks outperformed the S&P 500 Index by 4 percentage points through the middle of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Stewart Information Services Corp (NYSE:STC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds’ portfolios at the end of the third quarter of 2018. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Andersons, Inc. (NASDAQ:ANDE), Glu Mobile Inc. (NASDAQ:GLUU), and KEMET Corporation (NYSE:KEM) to gather more data points.
In today’s marketplace there are several gauges stock market investors have at their disposal to appraise publicly traded companies. A couple of the less utilized gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a superb amount (see the details here).
We’re going to take a look at the latest hedge fund action regarding Stewart Information Services Corp (NYSE:STC).
What does the smart money think about Stewart Information Services Corp (NYSE:STC)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, representing no change from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards STC over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Stewart Information Services Corp (NYSE:STC) was held by Magnetar Capital, which reported holding $51.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $21.4 million position. Other investors bullish on the company included Jet Capital Investors, Millennium Management, and Citadel Investment Group.
Seeing as Stewart Information Services Corp (NYSE:STC) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds who were dropping their entire stakes in the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest position of the “upper crust” of funds watched by Insider Monkey, worth about $0.8 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $0.6 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Stewart Information Services Corp (NYSE:STC). These stocks are The Andersons, Inc. (NASDAQ:ANDE), Glu Mobile Inc. (NASDAQ:GLUU), KEMET Corporation (NYSE:KEM), and Trueblue Inc (NYSE:TBI). All of these stocks’ market caps resemble STC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANDE | 8 | 62037 | 0 |
| GLUU | 22 | 115892 | 2 |
| KEM | 20 | 129835 | 1 |
| TBI | 14 | 67922 | -2 |
| Average | 16 | 93922 | 0.25 |
View table here if you experience formatting issues.
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 $94 million. That figure was $148 million in STC’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand The Andersons, Inc. (NASDAQ:ANDE) is the least popular one with only 8 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GLUU might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
