We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards State Auto Financial (NASDAQ:STFC).
Is State Auto Financial (NASDAQ:STFC) a first-rate investment right now? The best stock pickers are selling. The number of long hedge fund positions shrunk by 3 in recent months. It is important to consider that the shares of State Auto Financial (NASDAQ:STFC) were down 4.76% through the third quarter. For a better understanding of hedge fund behavior, we will cover hedge funds holding positions in the company, at the end of September.
The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Textainer Group Holdings Limited (NYSE:TGH), Inogen Inc (NASDAQ:INGN), and Changyou.Com Ltd (ADR) (NASDAQ:CYOU) to gather more data points.
Today, there are plenty of tools shareholders put to use to size up publicly traded companies. Some of the best tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a significant margin (see the details here).
Now, let’s review the fresh action encompassing State Auto Financial (NASDAQ:STFC).
How have hedgies been trading State Auto Financial (NASDAQ:STFC)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 43% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in State Auto Financial (NASDAQ:STFC), worth close to $11.9 million, amounting to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Robert Jaffe of Force Capital, with a $6.4 million position; 1.3% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish consist of Ron Bobman’s Capital Returns Management, and Renaissance Technologies.