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Hedge Funds Are Crazy About The Allstate Corporation (ALL)

Is The Allstate Corporation (NYSE:ALL) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

The Allstate Corporation (NYSE:ALL) investors should pay attention to an increase in hedge fund sentiment recently. ALL was in 34 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with ALL holdings at the end of the previous quarter. Our calculations also showed that all isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

We’re going to view the latest hedge fund action surrounding The Allstate Corporation (NYSE:ALL).

What does the smart money think about The Allstate Corporation (NYSE:ALL)?

At Q3’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALL over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with ALL Positions

According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the biggest position in The Allstate Corporation (NYSE:ALL), worth close to $803.2 million, amounting to 0.8% of its total 13F portfolio. On AQR Capital Management’s heels is John Overdeck and David Siegel of Two Sigma Advisors, with a $240 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism contain Noam Gottesman’s GLG Partners, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Now, key money managers were leading the bulls’ herd. Zebra Capital Management, managed by Roger Ibbotson, assembled the most outsized position in The Allstate Corporation (NYSE:ALL). Zebra Capital Management had $1 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also made a $0.5 million investment in the stock during the quarter. The other funds with brand new ALL positions are George Hall’s Clinton Group, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks similar to The Allstate Corporation (NYSE:ALL). These stocks are Canon Inc. (NYSE:CAJ), Autodesk, Inc. (NASDAQ:ADSK), Ferrari N.V. (NYSE:RACE), and Fiserv, Inc. (NASDAQ:FISV). This group of stocks’ market caps are closest to ALL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAJ 8 99666 1
ADSK 66 3574132 6
RACE 26 1308065 -1
FISV 31 594401 5
Average 32.75 1394066 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.39 billion. That figure was $2.10 billion in ALL’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. The Allstate Corporation (NYSE:ALL) 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. In this regard ADSK might be a better candidate to consider a long position.

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

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