The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded State Auto Financial Corporation (NASDAQ:STFC) based on those filings.
State Auto Financial Corporation (NASDAQ:STFC) was in 7 hedge funds’ portfolios at the end of June. STFC shareholders have witnessed an increase in hedge fund interest in recent months. There were 5 hedge funds in our database with STFC positions at the end of the previous quarter. Our calculations also showed that STFC isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are dozens of indicators stock traders have at their disposal to analyze stocks. Some of the less known indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outpace the broader indices by a very impressive margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the key hedge fund action regarding State Auto Financial Corporation (NASDAQ:STFC).
Hedge fund activity in State Auto Financial Corporation (NASDAQ:STFC)
At Q2’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STFC over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of State Auto Financial Corporation (NASDAQ:STFC), with a stake worth $10.2 million reported as of the end of March. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $6.2 million. Marshall Wace LLP, Millennium Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most valuable position in State Auto Financial Corporation (NASDAQ:STFC). Marshall Wace LLP had $2.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $2.2 million investment in the stock during the quarter. The only other fund with a brand new STFC position is Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to State Auto Financial Corporation (NASDAQ:STFC). These stocks are Mueller Water Products, Inc. (NYSE:MWA), World Acceptance Corporation (NASDAQ:WRLD), Skyline Champion Corporation (NYSE:SKY), and Tanger Factory Outlet Centers, Inc. (NYSE:SKT). This group of stocks’ market caps are closest to STFC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MWA | 18 | 246157 | 0 |
| WRLD | 11 | 279010 | -2 |
| SKY | 25 | 258382 | 1 |
| SKT | 14 | 85927 | -1 |
| Average | 17 | 217369 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $23 million in STFC’s case. Skyline Champion Corporation (NYSE:SKY) is the most popular stock in this table. On the other hand World Acceptance Corporation (NASDAQ:WRLD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks State Auto Financial Corporation (NASDAQ:STFC) is even less popular than WRLD. Hedge funds dodged a bullet by taking a bearish stance towards STFC. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately STFC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); STFC investors were disappointed as the stock returned -7.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
