The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Erie Indemnity Company (NASDAQ:ERIE).
Hedge fund interest in Erie Indemnity Company (NASDAQ:ERIE) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ERIE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare ERIE to other stocks including Icahn Enterprises LP (NASDAQ:IEP), AngloGold Ashanti Limited (NYSE:AU), and Shinhan Financial Group Co., Ltd. (NYSE:SHG) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several formulas market participants employ to value stocks. A couple of the less known formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can beat their index-focused peers by a healthy margin (see the details here).
David Harding of Winton Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s analyze the latest hedge fund action surrounding Erie Indemnity Company (NASDAQ:ERIE).
Do Hedge Funds Think ERIE Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. By comparison, 20 hedge funds held shares or bullish call options in ERIE a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Erie Indemnity Company (NASDAQ:ERIE) was held by Royce & Associates, which reported holding $17 million worth of stock at the end of September. It was followed by AQR Capital Management with a $14.7 million position. Other investors bullish on the company included Citadel Investment Group, Winton Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Erie Indemnity Company (NASDAQ:ERIE), around 0.22% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.18 percent of its 13F equity portfolio to ERIE.
Since Erie Indemnity Company (NASDAQ:ERIE) has faced a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of funds that decided to sell off their full holdings last quarter. Interestingly, Ray Dalio’s Bridgewater Associates dumped the biggest position of the 750 funds tracked by Insider Monkey, worth about $0.4 million in stock. Peter Muller’s fund, PDT Partners, also sold off its stock, about $0.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Erie Indemnity Company (NASDAQ:ERIE). We will take a look at Icahn Enterprises LP (NASDAQ:IEP), AngloGold Ashanti Limited (NYSE:AU), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Lumen Technologies, Inc. (NYSE:LUMN), W.R. Berkley Corporation (NYSE:WRB), Gold Fields Limited (NYSE:GFI), and Molina Healthcare, Inc. (NYSE:MOH). This group of stocks’ market values resemble ERIE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IEP | 4 | 10576402 | 1 |
| AU | 17 | 586074 | 1 |
| SHG | 4 | 18777 | 2 |
| LUMN | 31 | 762836 | 1 |
| WRB | 28 | 382157 | 1 |
| GFI | 15 | 508773 | 0 |
| MOH | 35 | 1418238 | 1 |
| Average | 19.1 | 2036180 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $2036 million. That figure was $59 million in ERIE’s case. Molina Healthcare, Inc. (NYSE:MOH) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Erie Indemnity Company (NASDAQ:ERIE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ERIE is 42.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately ERIE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ERIE investors were disappointed as the stock returned 6.2% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Erie Indemnity Co (NASDAQ:ERIE)
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Disclosure: None. This article was originally published at Insider Monkey.
