Was The Smart Money Right About The Travelers Companies Inc (NYSE:TRV)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought The Travelers Companies Inc (NYSE:TRV) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Is The Travelers Companies Inc (NYSE:TRV) an attractive investment now? The smart money was getting less optimistic. The number of bullish hedge fund positions were trimmed by 2 recently. The Travelers Companies Inc (NYSE:TRV) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that TRV 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 take a peek at the key hedge fund action surrounding The Travelers Companies Inc (NYSE:TRV).

Lee Ainslie of Maverick Capital

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

At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2021. On the other hand, there were a total of 35 hedge funds with a bullish position in TRV a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the largest position in The Travelers Companies Inc (NYSE:TRV). AQR Capital Management has a $194.6 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Brian Ashford-Russell and Tim Woolley of Polar Capital, with a $106.3 million position; 0.4% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to The Travelers Companies Inc (NYSE:TRV), around 0.96% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, setting aside 0.48 percent of its 13F equity portfolio to TRV.

Seeing as The Travelers Companies Inc (NYSE:TRV) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds that slashed their positions entirely in the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $33.5 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also dumped its stock, about $7.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Travelers Companies Inc (NYSE:TRV) but similarly valued. We will take a look at Kinder Morgan Inc (NYSE:KMI), The Allstate Corporation (NYSE:ALL), DiDi Global Inc. (NYSE:DIDI), Manulife Financial Corporation (NYSE:MFC), Xilinx, Inc. (NASDAQ:XLNX), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), and Banco Bradesco SA (NYSE:BBD). This group of stocks’ market values are closest to TRV’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $1126 million. That figure was $433 million in TRV’s case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand Banco Bradesco SA (NYSE:BBD) is the least popular one with only 13 bullish hedge fund positions. The Travelers Companies Inc (NYSE:TRV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRV is 47. 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 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on TRV as the stock returned 10% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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