As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Ally Financial Inc (NYSE:ALLY).
Ally Financial Inc (NYSE:ALLY) investors should be aware of a decrease in hedge fund sentiment lately. Ally Financial Inc (NYSE:ALLY) was in 51 hedge funds’ portfolios at the end of March. The all time high for this statistic is 57. There were 57 hedge funds in our database with ALLY holdings at the end of December. Our calculations also showed that ALLY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In today’s marketplace there are many gauges investors can use to assess publicly traded companies. A pair of the best gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the S&P 500 by a superb margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Kerr Neilson of Platinum Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. With all of this in mind let’s review the recent hedge fund action encompassing Ally Financial Inc (NYSE:ALLY).
Do Hedge Funds Think ALLY Is A Good Stock To Buy Now?
At Q1’s end, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 45 hedge funds with a bullish position in ALLY a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Howard Marks’s Oaktree Capital Management has the number one position in Ally Financial Inc (NYSE:ALLY), worth close to $505.2 million, accounting for 7.8% of its total 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $325.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Kerr Neilson’s Platinum Asset Management, Brandon Haley’s Holocene Advisors and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Punch Card Capital allocated the biggest weight to Ally Financial Inc (NYSE:ALLY), around 41.11% of its 13F portfolio. Glendon Capital Management is also relatively very bullish on the stock, designating 13.83 percent of its 13F equity portfolio to ALLY.
Due to the fact that Ally Financial Inc (NYSE:ALLY) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies who were dropping their positions entirely heading into Q2. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of all the hedgies monitored by Insider Monkey, worth about $35.4 million in stock. Principal Global Investors’s fund, Columbus Circle Investors, also cut its stock, about $16.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ally Financial Inc (NYSE:ALLY) but similarly valued. These stocks are Viatris Inc. (NASDAQ:VTRS), Tradeweb Markets Inc. (NASDAQ:TW), Qualtrics International Inc. (NASDAQ:XM), Jacobs Engineering Group Inc. (NYSE:J), Avantor, Inc. (NYSE:AVTR), QuantumScape Corporation (NYSE:QS), and Sun Communities Inc (NYSE:SUI). All of these stocks’ market caps are closest to ALLY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VTRS | 58 | 1825444 | -9 |
| TW | 26 | 311809 | -5 |
| XM | 37 | 1247053 | 37 |
| J | 24 | 995619 | -6 |
| AVTR | 48 | 2064929 | -8 |
| QS | 29 | 534668 | -6 |
| SUI | 35 | 1007911 | 8 |
| Average | 36.7 | 1141062 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.7 hedge funds with bullish positions and the average amount invested in these stocks was $1141 million. That figure was $2804 million in ALLY’s case. Viatris Inc. (NASDAQ:VTRS) is the most popular stock in this table. On the other hand Jacobs Engineering Group Inc. (NYSE:J) is the least popular one with only 24 bullish hedge fund positions. Ally Financial Inc (NYSE:ALLY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALLY is 65.5. 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 gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on ALLY, though not to the same extent, as the stock returned 9.9% since Q1 (through June 18th) and outperformed the market as well.
Follow Ally Financial Inc. (NYSE:ALLY)
Follow Ally Financial Inc. (NYSE:ALLY)
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Disclosure: None. This article was originally published at Insider Monkey.
