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Hedge Funds Are Betting On W.R. Berkley Corporation (WRB)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider W.R. Berkley Corporation (NYSE:WRB) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

W.R. Berkley Corporation (NYSE:WRB) was in 17 hedge funds’ portfolios at the end of the third quarter of 2018. WRB shareholders have witnessed an increase in enthusiasm from smart money in recent months. There were 16 hedge funds in our database with WRB positions at the end of the previous quarter. Our calculations also showed that WRB isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Boykin Curry EAGLE CAPITAL MANAGEMENT

We’re going to take a glance at the fresh hedge fund action encompassing W.R. Berkley Corporation (NYSE:WRB).

What have hedge funds been doing with W.R. Berkley Corporation (NYSE:WRB)?

Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in WRB heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

WRB_dec2018

Among these funds, Eagle Capital Management held the most valuable stake in W.R. Berkley Corporation (NYSE:WRB), which was worth $175.2 million at the end of the third quarter. On the second spot was Polar Capital which amassed $88.6 million worth of shares. Moreover, Renaissance Technologies, Balyasny Asset Management, and AQR Capital Management were also bullish on W.R. Berkley Corporation (NYSE:WRB), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, key money managers were leading the bulls’ herd. Royce & Associates, managed by Chuck Royce, created the largest position in W.R. Berkley Corporation (NYSE:WRB). Royce & Associates had $1.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new WRB investors: Benjamin A. Smith’s Laurion Capital Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks similar to W.R. Berkley Corporation (NYSE:WRB). These stocks are Torchmark Corporation (NYSE:TMK), Bunge Limited (NYSE:BG), Perrigo Company plc (NASDAQ:PRGO), and EXACT Sciences Corporation (NASDAQ:EXAS). This group of stocks’ market valuations match WRB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TMK 21 762817 -2
BG 39 1301171 0
PRGO 21 1045562 -4
EXAS 33 625480 2
Average 28.5 933758 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $934 million. That figure was $425 million in WRB’s case. 0 is the most popular stock in this table. On the other hand Torchmark Corporation (NYSE:TMK) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks W.R. Berkley Corporation (NYSE:WRB) is even less popular than TMK. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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