Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of W.R. Berkley Corporation (NYSE:WRB) based on that data.
Is W.R. Berkley Corporation (NYSE:WRB) undervalued? Prominent investors were reducing their bets on the stock. The number of bullish hedge fund positions shrunk by 5 in recent months. W.R. Berkley Corporation (NYSE:WRB) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 37. Our calculations also showed that WRB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Robert Pohly of Samlyn Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s view the key hedge fund action surrounding W.R. Berkley Corporation (NYSE:WRB).
Do Hedge Funds Think WRB Is A Good Stock To Buy Now?
At the end of March, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WRB over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in W.R. Berkley Corporation (NYSE:WRB), which was worth $116 million at the end of the fourth quarter. On the second spot was BloombergSen which amassed $111.4 million worth of shares. Samlyn Capital, Polar Capital, and D E Shaw 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 0 allocated the biggest weight to W.R. Berkley Corporation (NYSE:WRB), around 6.08% of its 13F portfolio. 0 is also relatively very bullish on the stock, designating 2.31 percent of its 13F equity portfolio to WRB.
Seeing as W.R. Berkley Corporation (NYSE:WRB) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds that elected to cut their positions entirely last quarter. Intriguingly, Paul Tudor Jones’s Tudor Investment Corp dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising about $4.9 million in stock. Richard Chilton’s fund, Chilton Investment Company, also sold off its stock, about $2.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to W.R. Berkley Corporation (NYSE:WRB). We will take a look at Telefonica Brasil SA (NYSE:VIV), Diamondback Energy Inc (NASDAQ:FANG), GameStop Corp. (NYSE:GME), Fortune Brands Home & Security Inc (NYSE:FBHS), PPD, Inc. (NASDAQ:PPD), Hasbro, Inc. (NASDAQ:HAS), and Godaddy Inc (NYSE:GDDY). This group of stocks’ market caps are closest to WRB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VIV | 9 | 90185 | 1 |
| FANG | 35 | 343531 | 1 |
| GME | 13 | 96439 | -14 |
| FBHS | 23 | 434532 | -7 |
| PPD | 29 | 822954 | 0 |
| HAS | 31 | 277091 | -5 |
| GDDY | 39 | 2366731 | -5 |
| Average | 25.6 | 633066 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $633 million. That figure was $645 million in WRB’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 9 bullish hedge fund positions. W.R. Berkley Corporation (NYSE:WRB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WRB is 64.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately WRB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WRB were disappointed as the stock returned 1.7% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Berkley W R Corp (NYSE:WRB)
Follow Berkley W R Corp (NYSE:WRB)
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Disclosure: None. This article was originally published at Insider Monkey.
