With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Chubb Limited (NYSE:CB).
Chubb Limited (NYSE:CB) was in 30 hedge funds’ portfolios at the end of the third quarter of 2018. CB has seen an increase in enthusiasm from smart money in recent months. There were 23 hedge funds in our database with CB positions at the end of the previous quarter. Our calculations also showed that cb isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
Let’s analyze the new hedge fund action surrounding Chubb Limited (NYSE:CB).
Hedge fund activity in Chubb Limited (NYSE:CB)
Heading into the fourth quarter of 2018, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in CB at the beginning of this year. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Polar Capital was the largest shareholder of Chubb Limited (NYSE:CB), with a stake worth $203.9 million reported as of the end of September. Trailing Polar Capital was Adage Capital Management, which amassed a stake valued at $105.1 million. AQR Capital Management, Renaissance Technologies, and Stevens Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Chubb Limited (NYSE:CB). Balyasny Asset Management had $3.1 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also initiated a $2.4 million position during the quarter. The other funds with new positions in the stock are Nick Thakore’s Diametric Capital, George Hall’s Clinton Group, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s go over hedge fund activity in other stocks similar to Chubb Limited (NYSE:CB). These stocks are Relx PLC (NYSE:RELX), General Dynamics Corporation (NYSE:GD), Prudential plc (NYSE:PUK), and T-Mobile US, Inc. (NYSE:TMUS). This group of stocks’ market values resemble CB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RELX | 5 | 114083 | -1 |
| GD | 35 | 8466691 | -6 |
| PUK | 5 | 5258 | -1 |
| TMUS | 80 | 4330201 | 12 |
| Average | 31.25 | 3229058 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $3.23 billion. That figure was $527 million in CB’s case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 5 bullish hedge fund positions. Chubb Limited (NYSE:CB) 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 TMUS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
