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 March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Hanover Insurance Group, Inc. (NYSE:THG).
Is THG a good stock to buy now? Investors who are in the know were cutting their exposure. The number of bullish hedge fund bets dropped by 2 recently. The Hanover Insurance Group, Inc. (NYSE:THG) was in 18 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that THG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Dmitry Balyasny of Balyasny Asset Management
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Do Hedge Funds Think THG Is A Good Stock To Buy Now?
At first quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in THG 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the number one position in The Hanover Insurance Group, Inc. (NYSE:THG). Two Sigma Advisors has a $23.9 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $16 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism consist of Richard S. Pzena’s Pzena Investment Management, Chuck Royce’s Royce & Associates and John D. Gillespie’s Prospector Partners. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to The Hanover Insurance Group, Inc. (NYSE:THG), around 0.91% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to THG.
Seeing as The Hanover Insurance Group, Inc. (NYSE:THG) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that slashed their positions entirely heading into Q2. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $5.1 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also dropped its stock, about $1.2 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds heading into Q2.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Hanover Insurance Group, Inc. (NYSE:THG) but similarly valued. These stocks are Sabre Corporation (NASDAQ:SABR), TeleTech Holdings, Inc. (NASDAQ:TTEC), nVent Electric plc (NYSE:NVT), MGIC Investment Corporation (NYSE:MTG), Hexcel Corporation (NYSE:HXL), UFP Industries, Inc. (NASDAQ:UFPI), and Perspecta Inc. (NYSE:PRSP). This group of stocks’ market caps are closest to THG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SABR | 40 | 1280794 | -6 |
| TTEC | 10 | 55504 | 0 |
| NVT | 31 | 338555 | 1 |
| MTG | 28 | 268803 | 1 |
| HXL | 18 | 98420 | -7 |
| UFPI | 16 | 171550 | -3 |
| PRSP | 40 | 957808 | 3 |
| Average | 26.1 | 453062 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $453 million. That figure was $96 million in THG’s case. Sabre Corporation (NASDAQ:SABR) is the most popular stock in this table. On the other hand TeleTech Holdings, Inc. (NASDAQ:TTEC) is the least popular one with only 10 bullish hedge fund positions. The Hanover Insurance Group, Inc. (NYSE:THG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for THG is 35.6. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately THG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); THG investors were disappointed as the stock returned 2.9% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Hanover Insurance Group Inc. (NYSE:THG)
Follow Hanover Insurance Group Inc. (NYSE:THG)
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Disclosure: None. This article was originally published at Insider Monkey.
