Should I Avoid W.R. Berkley Corporation (WRB)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of W.R. Berkley Corporation (NYSE:WRB) based on that data.

W.R. Berkley Corporation (NYSE:WRB) has seen a decrease in support from the world’s most elite money managers in recent months. W.R. Berkley Corporation (NYSE:WRB) was in 26 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. Our calculations also showed that WRB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the new hedge fund action surrounding W.R. Berkley Corporation (NYSE:WRB).

Robert Pohly of Samlyn Capital

Do Hedge Funds Think WRB Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WRB over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jonathan Bloomberg’s BloombergSen has the number one position in W.R. Berkley Corporation (NYSE:WRB), worth close to $109.7 million, corresponding to 5.6% of its total 13F portfolio. The second largest stake is held by Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $92.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Robert Pohly’s Samlyn Capital, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position BloombergSen allocated the biggest weight to W.R. Berkley Corporation (NYSE:WRB), around 5.62% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 1.01 percent of its 13F equity portfolio to WRB.

Seeing as W.R. Berkley Corporation (NYSE:WRB) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that elected to cut their full holdings in the third quarter. At the top of the heap, Daniel Johnson’s Gillson Capital sold off the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $28.9 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund cut about $22.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 10 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as W.R. Berkley Corporation (NYSE:WRB) but similarly valued. We will take a look at Fidelity National Financial Inc (NYSE:FNF), Lincoln National Corporation (NYSE:LNC), SoFi Technologies Inc. (NASDAQ:SOFI), Discovery Inc. (NASDAQ:DISCA), Whirlpool Corporation (NYSE:WHR), Santander Consumer USA Holdings Inc (NYSE:SC), and Aluminum Corp. of China Limited (NYSE:ACH). This group of stocks’ market caps are similar to WRB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $771 million. That figure was $594 million in WRB’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 7 bullish hedge fund positions. W.R. Berkley Corporation (NYSE:WRB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WRB is 43.2. 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. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on WRB as the stock returned 10.4% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.