The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Hartford Financial Services Group Inc (NYSE:HIG).
Is Hartford Financial Services Group Inc (NYSE:HIG) undervalued? Hedge funds are in a bullish mood. The number of bullish hedge fund positions improved by 2 recently. Our calculations also showed that HIG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the latest hedge fund action regarding Hartford Financial Services Group Inc (NYSE:HIG).
Hedge fund activity in Hartford Financial Services Group Inc (NYSE:HIG)
Heading into the fourth quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 37 hedge funds with a bullish position in HIG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Diamond Hill Capital was the largest shareholder of Hartford Financial Services Group Inc (NYSE:HIG), with a stake worth $262.7 million reported as of the end of September. Trailing Diamond Hill Capital was Citadel Investment Group, which amassed a stake valued at $119.8 million. D E Shaw, Carlson Capital, and Samlyn Capital 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 Prana Capital Management allocated the biggest weight to Hartford Financial Services Group Inc (NYSE:HIG), around 4.4% of its portfolio. Diamond Hill Capital is also relatively very bullish on the stock, earmarking 1.4 percent of its 13F equity portfolio to HIG.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. PEAK6 Capital Management, managed by Matthew Hulsizer, created the most outsized call position in Hartford Financial Services Group Inc (NYSE:HIG). PEAK6 Capital Management had $16.3 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $8.3 million position during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Jeffrey Talpins’s Element Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hartford Financial Services Group Inc (NYSE:HIG) but similarly valued. We will take a look at Stanley Black & Decker, Inc. (NYSE:SWK), Snap Inc. (NYSE:SNAP), Cerner Corporation (NASDAQ:CERN), and CoStar Group Inc (NASDAQ:CSGP). This group of stocks’ market valuations match HIG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWK | 26 | 1040404 | -1 |
| SNAP | 52 | 2118425 | 7 |
| CERN | 33 | 954875 | 4 |
| CSGP | 35 | 1384331 | 3 |
| Average | 36.5 | 1374509 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1375 million. That figure was $849 million in HIG’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand Stanley Black & Decker, Inc. (NYSE:SWK) is the least popular one with only 26 bullish hedge fund positions. Hartford Financial Services Group Inc (NYSE:HIG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately HIG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HIG investors were disappointed as the stock returned 2.6% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
