Is Assurant, Inc. (AIZ) Going to Burn These Hedge Funds?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Assurant, Inc. (NYSE:AIZ).

Assurant, Inc. (NYSE:AIZ) was in 26 hedge funds’ portfolios at the end of June. The all time high for this statistic is 39. AIZ investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 27 hedge funds in our database with AIZ holdings at the end of March. Our calculations also showed that AIZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Robert Pohly of Samlyn Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Now we’re going to analyze the recent hedge fund action encompassing Assurant, Inc. (NYSE:AIZ).

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

At second quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AIZ over the last 24 quarters. So, let’s examine 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 $376.6 million reported as of the end of June. Trailing Viking Global was Lyrical Asset Management, which amassed a stake valued at $178.1 million. Samlyn Capital, Adage Capital Management, and AQR Capital Management 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 One Fin Capital Management allocated the biggest weight to Assurant, Inc. (NYSE:AIZ), around 7.94% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, setting aside 2.16 percent of its 13F equity portfolio to AIZ.

Seeing as Assurant, Inc. (NYSE:AIZ) has faced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few fund managers who sold off their entire stakes heading into Q3. Interestingly, Peter Seuss’s Prana Capital Management dropped the biggest investment of the 750 funds tracked by Insider Monkey, worth close to $18.6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $9.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q3.

Let’s now review 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 The Western Union Company (NYSE:WU), Guidewire Software Inc (NYSE:GWRE), Aspen Technology, Inc. (NASDAQ:AZPN), Store Capital Corporation (NYSE:STOR), CubeSmart (NYSE:CUBE), Alleghany Corporation (NYSE:Y), and AECOM (NYSE:ACM). This group of stocks’ market caps are closest to AIZ’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $758 million. That figure was $945 million in AIZ’s case. Alleghany Corporation (NYSE:Y) is the most popular stock in this table. On the other hand Store Capital Corporation (NYSE:STOR) is the least popular one with only 13 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. Our overall hedge fund sentiment score for AIZ is 58.2. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on AIZ as the stock returned 4.4% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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