Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Ally Financial Inc (NYSE:ALLY).
Ally Financial Inc (NYSE:ALLY) was in 54 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 57. ALLY shareholders have witnessed an increase in hedge fund interest recently. There were 51 hedge funds in our database with ALLY positions at the end of the first quarter. Our calculations also showed that ALLY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the new hedge fund action regarding Ally Financial Inc (NYSE:ALLY).
Do Hedge Funds Think ALLY Is A Good Stock To Buy Now?
At Q2’s end, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the first quarter of 2020. By comparison, 54 hedge funds held shares or bullish call options in ALLY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Ally Financial Inc (NYSE:ALLY), with a stake worth $433.4 million reported as of the end of June. Trailing Arrowstreet Capital was Oaktree Capital Management, which amassed a stake valued at $342.6 million. Platinum Asset Management, Holocene Advisors, and Punch Card Capital 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 Punch Card Capital allocated the biggest weight to Ally Financial Inc (NYSE:ALLY), around 43.2% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, setting aside 7.87 percent of its 13F equity portfolio to ALLY.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Ally Financial Inc (NYSE:ALLY) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, initiated the most valuable position in Ally Financial Inc (NYSE:ALLY). Laurion Capital Management had $14.3 million invested in the company at the end of the quarter. Jason Mudrick’s Mudrick Capital Management also initiated a $7.5 million position during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ally Financial Inc (NYSE:ALLY) but similarly valued. We will take a look at SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Tyler Technologies, Inc. (NYSE:TYL), Catalent Inc (NYSE:CTLT), Pool Corporation (NASDAQ:POOL), PagSeguro Digital Ltd. (NYSE:PAGS), Genuine Parts Company (NYSE:GPC), and NetApp Inc. (NASDAQ:NTAP). This group of stocks’ market values are closest to ALLY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSNC | 49 | 2568906 | -5 |
| TYL | 33 | 731035 | 5 |
| CTLT | 40 | 870986 | 11 |
| POOL | 40 | 1025705 | -1 |
| PAGS | 40 | 2390344 | 7 |
| GPC | 29 | 418026 | 3 |
| NTAP | 31 | 437722 | 5 |
| Average | 37.4 | 1206103 | 3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1206 million. That figure was $2432 million in ALLY’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Ally Financial Inc (NYSE:ALLY) is more popular among hedge funds. Our overall hedge fund sentiment score for ALLY is 86.4. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Unfortunately ALLY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALLY were disappointed as the stock returned 0.2% since the end of the second quarter (through 11/5) 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 since 2019.
Follow Ally Financial Inc. (NYSE:ALLY)
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Disclosure: None. This article was originally published at Insider Monkey.
