In this article you are going to find out whether hedge funds think Aegon N.V. (NYSE:AEG) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Aegon N.V. (NYSE:AEG) has seen an increase in hedge fund interest in recent months. Aegon N.V. (NYSE:AEG) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 11. There were 4 hedge funds in our database with AEG positions at the end of the fourth quarter. Our calculations also showed that AEG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind let’s review the new hedge fund action encompassing Aegon N.V. (NYSE:AEG).
Do Hedge Funds Think AEG Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AEG over the last 23 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Aegon N.V. (NYSE:AEG), with a stake worth $23.2 million reported as of the end of March. Trailing Arrowstreet Capital was Millennium Management, which amassed a stake valued at $1.3 million. Renaissance Technologies, Two Sigma Advisors, and Paloma Partners 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 Arrowstreet Capital allocated the biggest weight to Aegon N.V. (NYSE:AEG), around 0.03% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, earmarking 0.0045 percent of its 13F equity portfolio to AEG.
Now, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the biggest position in Aegon N.V. (NYSE:AEG). Millennium Management had $1.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.9 million position during the quarter. The only other fund with a brand new AEG position is Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Aegon N.V. (NYSE:AEG) but similarly valued. These stocks are Comerica Incorporated (NYSE:CMA), Floor & Decor Holdings, Inc. (NYSE:FND), Elastic N.V. (NYSE:ESTC), Everest Re Group Ltd (NYSE:RE), Formula One Group (NASDAQ:FWONK), PRA Health Sciences Inc (NASDAQ:PRAH), and Gaming and Leisure Properties Inc (NASDAQ:GLPI). This group of stocks’ market values resemble AEG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMA | 32 | 704137 | -6 |
| FND | 38 | 1100201 | 7 |
| ESTC | 52 | 1884446 | 3 |
| RE | 32 | 520803 | 3 |
| FWONK | 37 | 1672098 | -5 |
| PRAH | 35 | 1066188 | 12 |
| GLPI | 28 | 594880 | -5 |
| Average | 36.3 | 1077536 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1078 million. That figure was $26 million in AEG’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Gaming and Leisure Properties Inc (NASDAQ:GLPI) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Aegon N.V. (NYSE:AEG) is even less popular than GLPI. Our overall hedge fund sentiment score for AEG is 23.4. 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. Hedge funds dodged a bullet by taking a bearish stance towards AEG. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately AEG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); AEG investors were disappointed as the stock returned -8.7% since the end of the first quarter (through 6/25) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
