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 Alight Inc. (NYSE:ALIT) based on that data and determine whether they were really smart about the stock.
Is Alight Inc. (NYSE:ALIT) the right investment to pursue these days? Investors who are in the know were getting more bullish. The number of bullish hedge fund positions increased by 42 recently. Alight Inc. (NYSE:ALIT) was in 42 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that ALIT 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 we’re going to view the new hedge fund action surrounding Alight Inc. (NYSE:ALIT).
David Tepper of Appaloosa Management LP
Do Hedge Funds Think ALIT Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALIT over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, FPR Partners held the most valuable stake in Alight Inc. (NYSE:ALIT), which was worth $212.8 million at the end of the third quarter. On the second spot was Third Point which amassed $195.2 million worth of shares. MFN Partners, Suvretta Capital Management, and Appaloosa Management LP 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 Azora Capital allocated the biggest weight to Alight Inc. (NYSE:ALIT), around 7.5% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, setting aside 5.65 percent of its 13F equity portfolio to ALIT.
As industrywide interest jumped, key money managers have been driving this bullishness. FPR Partners, managed by Bob Peck and Andy Raab, created the most valuable position in Alight Inc. (NYSE:ALIT). FPR Partners had $212.8 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also initiated a $195.2 million position during the quarter. The other funds with brand new ALIT positions are Farhad Nanji and Michael DeMichele’s MFN Partners, Aaron Cowen’s Suvretta Capital Management, and David Tepper’s Appaloosa Management LP.
Let’s check out hedge fund activity in other stocks similar to Alight Inc. (NYSE:ALIT). These stocks are Compass Inc. (NYSE:COMP), South State Corporation (NASDAQ:SSB), IDACORP Inc (NYSE:IDA), National Instruments Corporation (NASDAQ:NATI), Stantec Inc. (NYSE:STN), TIM S.A. (NYSE:TIMB), and LegalZoom.com Inc. (NASDAQ:LZ). All of these stocks’ market caps match ALIT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COMP | 25 | 708383 | 25 |
| SSB | 20 | 282835 | 2 |
| IDA | 12 | 81266 | -3 |
| NATI | 24 | 249677 | 3 |
| STN | 9 | 75656 | -1 |
| TIMB | 11 | 75843 | 0 |
| LZ | 16 | 179836 | 16 |
| Average | 16.7 | 236214 | 6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $1278 million in ALIT’s case. Compass Inc. (NYSE:COMP) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Alight Inc. (NYSE:ALIT) is more popular among hedge funds. Our overall hedge fund sentiment score for ALIT is 90. 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. Unfortunately, ALIT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALIT were disappointed as the stock returned -15.9% since the end of the third quarter (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Alight Inc. / Delaware (NYSE:ALIT)
Follow Alight Inc. / Delaware (NYSE:ALIT)
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Disclosure: None. This article was originally published at Insider Monkey.
