With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Arthur J. Gallagher & Co. (NYSE:AJG).
Is Arthur J. Gallagher & Co. ready to rally soon? The best stock pickers are becoming more confident. The number of bullish hedge fund bets increased by 2 in recent months. AJG was in 20 hedge funds’ portfolios at the end of the third quarter of 2015. There were 18 hedge funds in our database with AJG positions at the end of the previous quarter. 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 Synopsys, Inc. (NASDAQ:SNPS), Mobile TeleSystems OJSC (ADR) (NYSE:MBT), and China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) to gather more data points.
Follow Arthur J. Gallagher & Co. (NYSE:AJG)
Follow Arthur J. Gallagher & Co. (NYSE:AJG)
At the moment there are plenty of formulas stock traders can use to value stocks. A duo of the less known formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the broader indices by a solid margin (see the details here).
Now, let’s check out the recent action regarding Arthur J. Gallagher & Co. (NYSE:AJG).
How are hedge funds trading Arthur J. Gallagher & Co. (NYSE:AJG)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Arthur J. Gallagher & Co. (NYSE:AJG). Citadel Investment Group has a $58.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $41.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates and Cliff Asness’s AQR Capital Management.
Now, key hedge funds were leading the bulls’ herd. Blue Arrow Capital Management, managed by Millennium Management Subsidiary, created the most valuable position in Arthur J. Gallagher & Co. (NYSE:AJG). Blue Arrow Capital Management had $9.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $5.7 million investment in the stock during the quarter. The following funds were also among the new AJG investors: Joel Greenblatt’s Gotham Asset Management, Matthew Tewksbury’s Stevens Capital Management, and Ray Dalio’s Bridgewater Associates.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Arthur J. Gallagher & Co. (NYSE:AJG) but similarly valued. We will take a look at Synopsys, Inc. (NASDAQ:SNPS), Mobile TeleSystems OJSC (ADR) (NYSE:MBT), China Southern Airlines Co Ltd (ADR) (NYSE:ZNH), and ResMed Inc. (NYSE:RMD). This group of stocks’ market values match AJG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNPS | 21 | 279842 | 2 |
| MBT | 13 | 112232 | 1 |
| ZNH | 4 | 22919 | 0 |
| RMD | 16 | 155642 | -2 |
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $201 million in AJG’s case. Synopsys, Inc. (NASDAQ:SNPS) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) is the least popular one with only 4 bullish hedge fund positions. Arthur J. Gallagher & Co. (NYSE:AJG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal making AJG worth a closer look.
