Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of AEGON N.V. (ADR) (NYSE:AEG).
AEGON N.V. (ADR) (NYSE:AEG) shareholders have witnessed a decrease in hedge fund interest in recent months. At the end of this article, we will also compare AEG to other stocks, including Fifth Third Bancorp (NASDAQ:FITB), Edwards Lifesciences Corp (NYSE:EW), and Devon Energy Corp (NYSE:DVN) to get a better sense of its popularity.
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To most market participants, hedge funds are perceived as slow, outdated financial vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, our researchers choose to focus on the aristocrats of this group, around 700 funds. These investment experts command the bulk of all hedge funds’ total asset base, and by watching their finest investments, Insider Monkey has spotted several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s take a look at the latest action surrounding AEGON N.V. (ADR) (NYSE:AEG).
What have hedge funds been doing with AEGON N.V. (ADR) (NYSE:AEG)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 14% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the largest position in AEGON N.V. (ADR) (NYSE:AEG), worth close to $9 million, corresponding to less than 0.1% of its total 13F portfolio. On Arrowstreet Capital’s heels is John Overdeck and David Siegel of Two Sigma Advisors, with a $1.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism comprise David Dreman’s Dreman Value Management, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Stevens Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because none of the 700+ hedge funds tracked by Insider Monkey identified AEGON N.V. (ADR) (NYSE:AEG) as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks similar to AEGON N.V. (ADR) (NYSE:AEG). These stocks are Fifth Third Bancorp (NASDAQ:FITB), Edwards Lifesciences Corp (NYSE:EW), Devon Energy Corp (NYSE:DVN), and Sprint Corp (NYSE:S). This group of stocks’ market valuations matches AEGON N.V. (ADR) (NYSE:AEG)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FITB | 28 | 440321 | -13 |
| EW | 46 | 2103833 | 0 |
| DVN | 48 | 1792461 | -8 |
| S | 16 | 183093 | -7 |
As you can see, these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1130 million. That figure was $12 million in AEGON N.V. (ADR) (NYSE:AEG)’s case. Devon Energy Corp (NYSE:DVN) is the most popular stock in this table. On the other hand, Sprint Corp (NYSE:S) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks, AEGON N.V. (ADR) (NYSE:AEG) is even less popular than Sprint Corp (NYSE:S). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
