We started seeing tectonic shifts in the market during the third quarter. Small-cap stocks underperformed the large-cap stocks by more than 10 percentage points between the end of June 2015 and the end of June 2016. A mean reversion in trends bumped small-cap stocks’ return to almost 9% in Q3, outperforming their large-cap peers by 5 percentage points. The momentum in small-cap space hasn’t subsided during this quarter either. Small-cap stocks beat large-cap stocks by another 5 percentage points during the first 7 weeks of this quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were boosting their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards RenaissanceRe Holdings Ltd. (NYSE:RNR) .
Is RenaissanceRe Holdings Ltd. (NYSE:RNR) undervalued? The best stock pickers are betting on the stock. The number of long hedge fund investments grew by 2 in recent months. RNRwas in 17 hedge funds’ portfolios at the end of the third quarter of 2016. There were 15 hedge funds in our database with RNR holdings at the end of the previous quarter. At the end of this article we will also compare RNR to other stocks including Old Republic International Corporation (NYSE:ORI), Voya Financial Inc (NYSE:VOYA), and Tegna Inc (NYSE:TGNA) to get a better sense of its popularity.
Follow Renaissancere Holdings Ltd (NYSE:RNR)
Follow Renaissancere Holdings Ltd (NYSE:RNR)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a peek at the fresh action encompassing RenaissanceRe Holdings Ltd. (NYSE:RNR).
How have hedgies been trading RenaissanceRe Holdings Ltd. (NYSE:RNR)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RNR over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Gavin M. Abrams’ Abrams Bison Investments has the most valuable position in RenaissanceRe Holdings Ltd. (NYSE:RNR), worth close to $75.2 million, amounting to 8.2% of its total 13F portfolio. The second largest stake is held by Hillhouse Capital Management, led by Lei Zhang, holding a $51.4 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of Jim Simons’ Renaissance Technologies, Cliff Asness’ AQR Capital Management and Brian Ashford-Russell and Tim Woolley’s Polar Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers have been driving this bullishness. Highbridge Capital Management, led by Glenn Russell Dubin, created the largest position in RenaissanceRe Holdings Ltd. (NYSE:RNR). Highbridge Capital Management had $5.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new RNR investors: Mike Vranos’ Ellington and Ken Griffin’s Citadel Investment Group.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as RenaissanceRe Holdings Ltd. (NYSE:RNR) but similarly valued. We will take a look at Old Republic International Corporation (NYSE:ORI), Voya Financial Inc (NYSE:VOYA), Tegna Inc (NYSE:TGNA), and Old Dominion Freight Line (NASDAQ:ODFL). This group of stocks’ market valuations resemble RNR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORI | 23 | 233631 | 3 |
| VOYA | 38 | 1161480 | 1 |
| TGNA | 22 | 515673 | 4 |
| ODFL | 14 | 67609 | -10 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $495 million. That figure was $279 million in RNR’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Old Dominion Freight Line (NASDAQ:ODFL) is the least popular one with only 14 bullish hedge fund positions. RenaissanceRe Holdings Ltd. (NYSE:RNR) 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. In this regard VOYA might be a better candidate to consider taking a long position in.
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