Do Hedge Funds Love The Allstate Corporation (ALL)?

In this article we will analyze whether The Allstate Corporation (NYSE:ALL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

The Allstate Corporation (NYSE:ALL) has experienced a decrease in hedge fund interest in recent months. The Allstate Corporation (NYSE:ALL) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 48. There were 46 hedge funds in our database with ALL holdings at the end of June. Our calculations also showed that ALL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Andreas Halvorsen

Andreas Halvorsen of Viking Global

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a peek at the key hedge fund action regarding The Allstate Corporation (NYSE:ALL).

Do Hedge Funds Think ALL Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ALL over the last 21 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in The Allstate Corporation (NYSE:ALL), which was worth $400.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $219.3 million worth of shares. GLG Partners, Two Sigma Advisors, and Viking Global were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prana Capital Management allocated the biggest weight to The Allstate Corporation (NYSE:ALL), around 2.63% of its 13F portfolio. Scion Asset Management is also relatively very bullish on the stock, setting aside 2.57 percent of its 13F equity portfolio to ALL.

Due to the fact that The Allstate Corporation (NYSE:ALL) has witnessed bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedge funds who were dropping their entire stakes heading into Q4. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest position of the 750 funds monitored by Insider Monkey, worth about $14.2 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $7.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to The Allstate Corporation (NYSE:ALL). These stocks are T. Rowe Price Group, Inc. (NASDAQ:TROW), Trane Technologies plc (NYSE:TT), PPG Industries, Inc. (NYSE:PPG), Best Buy Co., Inc. (NYSE:BBY), Match Group, Inc. (NASDAQ:MTCH), Paychex, Inc. (NASDAQ:PAYX), and Peloton Interactive, Inc. (NASDAQ:PTON). All of these stocks’ market caps resemble ALL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TROW 34 348235 0
TT 37 831744 -3
PPG 36 230601 0
BBY 40 1195041 7
MTCH 61 2846837 22
PAYX 28 724599 -8
PTON 58 3497757 8
Average 42 1382116 3.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $1382 million. That figure was $1247 million in ALL’s case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Paychex, Inc. (NASDAQ:PAYX) is the least popular one with only 28 bullish hedge fund positions. The Allstate Corporation (NYSE:ALL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALL is 35.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on ALL as the stock returned 14.7% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

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