Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Are Dumping Alleghany Corporation (Y)

We can judge whether Alleghany Corporation (NYSE:Y) 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, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is Alleghany Corporation (NYSE:Y) a good investment today? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund bets were cut by 3 in recent months. Our calculations also showed that y isn’t among the 30 most popular stocks among hedge funds. Y was in 21 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with Y holdings at the end of the previous quarter.

In the 21st century investor’s toolkit there are several tools shareholders can use to assess their holdings. Two of the less utilized tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top money managers can trounce their index-focused peers by a significant amount (see the details here).

Chuck Royce

Let’s take a look at the fresh hedge fund action surrounding Alleghany Corporation (NYSE:Y).

Hedge fund activity in Alleghany Corporation (NYSE:Y)

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in Y over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

No of Hedge Funds with Y Positions

The largest stake in Alleghany Corporation (NYSE:Y) was held by Royce & Associates, which reported holding $94.7 million worth of stock at the end of September. It was followed by Polar Capital with a $88.6 million position. Other investors bullish on the company included AQR Capital Management, Lomas Capital Management, and Millennium Management.

Due to the fact that Alleghany Corporation (NYSE:Y) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers who sold off their entire stakes in the third quarter. Interestingly, Martin Whitman’s Third Avenue Management dropped the biggest position of all the hedgies watched by Insider Monkey, comprising about $40.7 million in stock. Greg Poole’s fund, Echo Street Capital Management, also said goodbye to its stock, about $7.2 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Alleghany Corporation (NYSE:Y) but similarly valued. We will take a look at Lamb Weston Holdings, Inc. (NYSE:LW), Zions Bancorporation, National Association (NASDAQ:ZION), W.R. Berkley Corporation (NYSE:WRB), and Torchmark Corporation (NYSE:TMK). This group of stocks’ market valuations resemble Y’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LW 34 909479 5
ZION 32 797532 -2
WRB 17 425023 1
TMK 21 762817 -2
Average 26 723713 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $724 million. That figure was $366 million in Y’s case. Lamb Weston Holdings, Inc. (NYSE:LW) is the most popular stock in this table. On the other hand W.R. Berkley Corporation (NYSE:WRB) is the least popular one with only 17 bullish hedge fund positions. Alleghany Corporation (NYSE:Y) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LW might be a better candidate to consider a long position.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...