We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 4 years and analyze what the smart money thinks of Assurant, Inc. (NYSE:AIZ) based on that data.
Assurant, Inc. (NYSE:AIZ) investors should be aware of a decrease in activity from the world’s largest hedge funds recently. AIZ was in 25 hedge funds’ portfolios at the end of December. There were 30 hedge funds in our database with AIZ positions at the end of the previous quarter. Our calculations also showed that AIZ isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most market participants, hedge funds are perceived as unimportant, old financial vehicles of years past. While there are more than 8000 funds trading at present, Our researchers hone in on the moguls of this group, around 850 funds. These investment experts orchestrate bulk of the hedge fund industry’s total asset base, and by tracking their highest performing investments, Insider Monkey has found many investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Andreas Halvorsen of Viking Global
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the latest hedge fund action regarding Assurant, Inc. (NYSE:AIZ).
How have hedgies been trading Assurant, Inc. (NYSE:AIZ)?
At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in AIZ a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Viking Global was the largest shareholder of Assurant, Inc. (NYSE:AIZ), with a stake worth $244 million reported as of the end of September. Trailing Viking Global was Lyrical Asset Management, which amassed a stake valued at $210.8 million. Samlyn Capital, AQR Capital Management, and Renaissance Technologies 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 Strycker View Capital allocated the biggest weight to Assurant, Inc. (NYSE:AIZ), around 5.76% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, designating 5.13 percent of its 13F equity portfolio to AIZ.
Since Assurant, Inc. (NYSE:AIZ) has witnessed declining sentiment from hedge fund managers, logic holds that there were a few hedge funds that slashed their entire stakes by the end of the third quarter. At the top of the heap, David Harding’s Winton Capital Management dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at about $17.4 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $5.3 million worth. These moves are interesting, as total hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Assurant, Inc. (NYSE:AIZ) but similarly valued. We will take a look at Santander Consumer USA Holdings Inc (NYSE:SC), Huaneng Power International Inc (NYSE:HNP), American Homes 4 Rent (NYSE:AMH), and Logitech International SA (NASDAQ:LOGI). This group of stocks’ market values resemble AIZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SC | 27 | 845363 | 2 |
| HNP | 3 | 2790 | -1 |
| AMH | 23 | 320922 | -4 |
| LOGI | 13 | 255513 | -3 |
| Average | 16.5 | 356147 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $886 million in AIZ’s case. Santander Consumer USA Holdings Inc (NYSE:SC) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 3 bullish hedge fund positions. Assurant, Inc. (NYSE:AIZ) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately AIZ wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AIZ were disappointed as the stock returned -35.7% during the same time period 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 this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
