At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards The Allstate Corporation (NYSE:ALL).
The Allstate Corporation (NYSE:ALL) shareholders have witnessed an increase in hedge fund sentiment recently. Our calculations also showed that ALL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are tons of indicators investors use to evaluate stocks. A duo of the most under-the-radar indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best investment managers can trounce the broader indices by a very impressive amount (see the details here).
John Overdeck of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a glance at the key hedge fund action regarding The Allstate Corporation (NYSE:ALL).
What does smart money think about The Allstate Corporation (NYSE:ALL)?
At the end of the first quarter, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the fourth quarter of 2019. On the other hand, there were a total of 36 hedge funds with a bullish position in ALL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of The Allstate Corporation (NYSE:ALL), with a stake worth $554.4 million reported as of the end of September. Trailing AQR Capital Management was Citadel Investment Group, which amassed a stake valued at $162.2 million. GLG Partners, Senator Investment Group, and Two Sigma Advisors 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 Senator Investment Group allocated the biggest weight to The Allstate Corporation (NYSE:ALL), around 3.49% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, designating 3.47 percent of its 13F equity portfolio to ALL.
Consequently, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the largest position in The Allstate Corporation (NYSE:ALL). Citadel Investment Group had $162.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $72.3 million investment in the stock during the quarter. The other funds with brand new ALL positions are Dmitry Balyasny’s Balyasny Asset Management, Brandon Haley’s Holocene Advisors, and John Murphy’s Levin Easterly Partners.
Let’s now take a look at hedge fund activity in other stocks similar to The Allstate Corporation (NYSE:ALL). We will take a look at Electronic Arts Inc. (NASDAQ:EA), Metlife Inc (NYSE:MET), WEC Energy Group, Inc. (NYSE:WEC), and The Hershey Company (NYSE:HSY). This group of stocks’ market values match ALL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EA | 73 | 1987020 | 5 |
| MET | 34 | 1018231 | -4 |
| WEC | 29 | 267388 | 14 |
| HSY | 33 | 958331 | -6 |
| Average | 42.25 | 1057743 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $1058 million. That figure was $1536 million in ALL’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand WEC Energy Group, Inc. (NYSE:WEC) is the least popular one with only 29 bullish hedge fund positions. The Allstate Corporation (NYSE:ALL) is not the most popular stock in this group but hedge fund interest is still above average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately ALL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ALL were disappointed as the stock returned 7.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Allstate Corp (NYSE:ALL)
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Disclosure: None. This article was originally published at Insider Monkey.
