We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Voya Financial Inc (NYSE:VOYA).
Voya Financial Inc (NYSE:VOYA) was in 37 hedge funds’ portfolios at the end of the third quarter of 2019. VOYA investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 43 hedge funds in our database with VOYA positions at the end of the previous quarter. Our calculations also showed that VOYA 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.
To the average investor there are a multitude of formulas shareholders use to assess publicly traded companies. Some of the less known formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outperform the S&P 500 by a very impressive margin (see the details here).
David E. Shaw of D.E. Shaw
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 gander at the new hedge fund action regarding Voya Financial Inc (NYSE:VOYA).
What does smart money think about Voya Financial Inc (NYSE:VOYA)?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. By comparison, 38 hedge funds held shares or bullish call options in VOYA a year ago. 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, Pzena Investment Management was the largest shareholder of Voya Financial Inc (NYSE:VOYA), with a stake worth $304.3 million reported as of the end of September. Trailing Pzena Investment Management was Samlyn Capital, which amassed a stake valued at $120.8 million. Citadel Investment Group, D E Shaw, and Millennium 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 Capital Returns Management allocated the biggest weight to Voya Financial Inc (NYSE:VOYA), around 6.86% of its portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 5.3 percent of its 13F equity portfolio to VOYA.
Due to the fact that Voya Financial Inc (NYSE:VOYA) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that decided to sell off their full holdings heading into Q4. At the top of the heap, Clint Carlson’s Carlson Capital cut the biggest position of all the hedgies tracked by Insider Monkey, totaling about $40.8 million in stock. James Parsons’s fund, Junto Capital Management, also dumped its stock, about $37.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Voya Financial Inc (NYSE:VOYA) but similarly valued. We will take a look at Liberty Property Trust (NYSE:LPT), Perrigo Company plc (NASDAQ:PRGO), ServiceMaster Global Holdings Inc (NYSE:SERV), and AptarGroup, Inc. (NYSE:ATR). This group of stocks’ market valuations resemble VOYA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPT | 29 | 576112 | 10 |
| PRGO | 15 | 453537 | -6 |
| SERV | 26 | 927792 | -4 |
| ATR | 22 | 112361 | 2 |
| Average | 23 | 517451 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $1077 million in VOYA’s case. Liberty Property Trust (NYSE:LPT) is the most popular stock in this table. On the other hand Perrigo Company plc (NASDAQ:PRGO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Voya Financial Inc (NYSE:VOYA) is more popular among hedge funds. 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. Hedge funds were also right about betting on VOYA, though not to the same extent, as the stock returned 7.3% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
