Is Alleghany (Y) Stock A Buy or Sell?

In this article you are going to find out whether hedge funds think Alleghany Corporation (NYSE:Y) 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.

Is Y stock a buy? Alleghany Corporation (NYSE:Y) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Y has experienced an increase in support from the world’s most elite money managers lately. There were 29 hedge funds in our database with Y positions at the end of the third quarter. Our calculations also showed that Y isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Today there are many metrics market participants put to use to evaluate their holdings. A pair of the most underrated metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a healthy amount (see the details here).

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a look at the recent hedge fund action encompassing Alleghany Corporation (NYSE:Y).

Do Hedge Funds Think Y Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in Y a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, holds the most valuable position in Alleghany Corporation (NYSE:Y). Polar Capital has a $111.7 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Daniel Lascano of Lomas Capital Management, with a $53.3 million position; 5.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Chuck Royce’s Royce & Associates, John D. Gillespie’s Prospector Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Lomas Capital Management allocated the biggest weight to Alleghany Corporation (NYSE:Y), around 5.11% of its 13F portfolio. Mountain Lake Investment Management is also relatively very bullish on the stock, designating 4.38 percent of its 13F equity portfolio to Y.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Alleghany Corporation (NYSE:Y) but similarly valued. We will take a look at Dada Nexus Limited (NASDAQ:DADA), AGNC Investment Corp. (NASDAQ:AGNC), Hubbell Incorporated (NYSE:HUBB), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Chemed Corporation (NYSE:CHE), Natera Inc (NASDAQ:NTRA), and Iron Mountain Incorporated (NYSE:IRM). All of these stocks’ market caps resemble Y’s market cap.

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As you can see these stocks had an average of 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $814 million. That figure was $365 million in Y’s case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 18 bullish hedge fund positions. Alleghany Corporation (NYSE:Y) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for Y is 68.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately Y wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on Y were disappointed as the stock returned 5.4% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.