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The Allstate Corporation (NYSE:ALL): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is The Allstate Corporation (NYSE:ALL) ready to raly soon? The best stock pickers are selling. The number of long hedge fundbets stayed the same which is a slightly negative development in our experience

In the eyes of most stock holders, hedge funds are seen as worthless, old financial tools of the past. While there are over 8000 funds in operation today, we at Insider Monkey look at the elite of this group, about 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total capital, and by monitoring their top picks, we have identified a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

The Allstate Corporation (NYSE:ALL)

Just as key, optimistic insider trading activity is a second way to parse down the world of equities. As the old adage goes: there are a variety of incentives for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).

With all of this in mind, it’s important to take a peek at the latest action surrounding The Allstate Corporation (NYSE:ALL).

How are hedge funds trading The Allstate Corporation (NYSE:ALL)?

At the end of the fourth quarter, a total of 26 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings substantially.

Of the funds we track, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in The Allstate Corporation (NYSE:ALL). Pzena Investment Management has a $261 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is Rob Citrone of Discovery Capital Management, with a $175 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management and Steven Cohen’s SAC Capital Advisors.

Seeing as The Allstate Corporation (NYSE:ALL) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of hedgies who were dropping their entire stakes last quarter. It’s worth mentioning that Michael Messner’s Seminole Capital (Investment Mgmt) said goodbye to the largest position of the 450+ funds we watch, worth about $40 million in stock., and Richard Schimel of Diamondback Capital was right behind this move, as the fund dumped about $23 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with The Allstate Corporation (NYSE:ALL)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the latest 180-day time period, The Allstate Corporation (NYSE:ALL) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

With the returns exhibited by Insider Monkey’s studies, everyday investors must always pay attention to hedge fund and insider trading activity, and The Allstate Corporation (NYSE:ALL) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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