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Did Hedge Funds Make The Right Call On RenaissanceRe Holdings Ltd. (RNR) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtRenaissanceRe Holdings Ltd. (NYSE:RNR) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is RenaissanceRe Holdings Ltd. (NYSE:RNR) worth your attention right now? The best stock pickers were getting more bullish. The number of long hedge fund positions moved up by 7 recently. Our calculations also showed that RNR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). RNR was in 30 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with RNR positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital

Sander Gerber of Hudson Bay Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Keeping this in mind let’s analyze the key hedge fund action regarding RenaissanceRe Holdings Ltd. (NYSE:RNR).

What does smart money think about RenaissanceRe Holdings Ltd. (NYSE:RNR)?

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RNR over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Is RNR A Good Stock To Buy?

The largest stake in RenaissanceRe Holdings Ltd. (NYSE:RNR) was held by AQR Capital Management, which reported holding $138 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $122.4 million position. Other investors bullish on the company included Citadel Investment Group, Polar Capital, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to RenaissanceRe Holdings Ltd. (NYSE:RNR), around 12.91% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, setting aside 7.23 percent of its 13F equity portfolio to RNR.

Consequently, key hedge funds were breaking ground themselves. BlueMar Capital Management, managed by David Rodriguez-Fraile, established the largest position in RenaissanceRe Holdings Ltd. (NYSE:RNR). BlueMar Capital Management had $16.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $9.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, Anthony Bozza’s Lakewood Capital Management, and Gregg Moskowitz’s Interval Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as RenaissanceRe Holdings Ltd. (NYSE:RNR) but similarly valued. These stocks are Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Guardant Health, Inc. (NASDAQ:GH), Guidewire Software Inc (NYSE:GWRE), and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). All of these stocks’ market caps are closest to RNR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IONS 22 342085 -5
GH 27 549369 -2
GWRE 34 756960 2
ACAD 28 2404189 -6
Average 27.75 1013151 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1013 million. That figure was $676 million in RNR’s case. Guidewire Software Inc (NYSE:GWRE) is the most popular stock in this table. On the other hand Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) is the least popular one with only 22 bullish hedge fund positions. RenaissanceRe Holdings Ltd. (NYSE:RNR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately RNR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RNR were disappointed as the stock returned 14.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.