A 13G filed with the SEC has disclosed that billionaire Steve Cohen’s SAC Capital Advisors owns 2.3 million shares of $4 billion market cap property and casualty insurance company RenaissanceRe Holdings Ltd. (NYSE:RNR), giving the large hedge fund 5.3% of the total shares outstanding. We track quarterly 13F filings from hedge funds such as SAC as well as other notable investors to help us develop investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year) and can see from our database that Cohen and his team only owned about 120,000 shares at the beginning of this year. So the fund has become more bullish on RenaissanceRe Holdings Ltd. (NYSE:RNR) over the course of this year, as the stock price has risen 13%. Find Cohen’s favorite stocks from the end of December.
Total revenues declined in the first quarter of 2013 versus a year earlier, and with operating expenses increasing RenaissanceRe reported an 11% decrease in net income; the decline does fall to 5% if we include smaller net income from noncontrolling interests and smaller dividends on preferred shares. However, the business does not need to do particularly well: the trailing earnings multiple is 8, so even if earnings per share decrease a limited amount going forward the stock could end up a good value at these prices. We’d note that Wall Street analysts are projecting slightly lower EPS in 2014 than what RenaissanceRe Holdings Ltd. (NYSE:RNR) has achieved on a trailing basis, with the result being a forward P/E of 9. The company appears to be less of an apparent value in asset terms, with the current market capitalization representing a premium to the book value of RenaissanceRe’s equity (the P/B ratio is 1.3).
We’ve already mentioned the limited involvement from SAC at the end of the fourth quarter of 2012. Citadel Investment Group, managed by billionaire Ken Griffin, more than doubled the size of its own position in RenaissanceRe Holdings Ltd. (NYSE:RNR) between October and December, closing the year with about 950,000 shares in its portfolio (check out more stocks Griffin was buying). William Gray’s Orbis Investment Management cut its stake by 60% but still disclosed ownership of 1.2 million shares (see more stocks Orbis owned).
