Hedge Funds Are Dumping Genworth Financial Inc (GNW)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Genworth Financial Inc (NYSE:GNW) changed recently.

Genworth Financial Inc (NYSE:GNW) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. GNW has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 36 hedge funds in our database with GNW positions at the end of the fourth quarter. Our calculations also showed that GNW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most shareholders, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are more than 8000 funds trading at the moment, Our experts look at the elite of this club, about 850 funds. It is estimated that this group of investors have their hands on bulk of all hedge funds’ total asset base, and by tailing their highest performing picks, Insider Monkey has uncovered numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a peek at the recent hedge fund action encompassing Genworth Financial Inc (NYSE:GNW).

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

At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GNW over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Genworth Financial Inc (NYSE:GNW) was held by Shah Capital Management, which reported holding $35.1 million worth of stock at the end of December. It was followed by GLG Partners with a $24.9 million position. Other investors bullish on the company included Millennium Management, Sonic Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Shah Capital Management allocated the biggest weight to Genworth Financial Inc (NYSE:GNW), around 9.68% of its 13F portfolio. Sonic Capital is also relatively very bullish on the stock, dishing out 8.41 percent of its 13F equity portfolio to GNW.

Since Genworth Financial Inc (NYSE:GNW) has witnessed a decline in interest from hedge fund managers, logic holds that there was a specific group of funds who were dropping their positions entirely heading into Q2. Intriguingly, Bill Miller’s Miller Value Partners said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $27.6 million in stock. Carl Tiedemann and Michael Tiedemann’s fund, TIG Advisors, also sold off its stock, about $24.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 12 funds heading into Q2.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Genworth Financial Inc (NYSE:GNW) but similarly valued. These stocks are American Woodmark Corporation (NASDAQ:AMWD), Great Western Bancorp Inc (NYSE:GWB), SEMrush Holdings, Inc. (NYSE:SEMR), Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), Addus Homecare Corporation (NASDAQ:ADUS), Malibu Boats Inc (NASDAQ:MBUU), and Cytokinetics, Inc. (NASDAQ:CYTK). This group of stocks’ market values are similar to GNW’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMWD 14 51358 3
GWB 13 28756 0
SEMR 20 57490 20
AUPH 27 224594 3
ADUS 17 62230 -1
MBUU 16 150234 0
CYTK 29 585164 3
Average 19.4 165689 4

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $186 million in GNW’s case. Cytokinetics, Inc. (NASDAQ:CYTK) is the most popular stock in this table. On the other hand Great Western Bancorp Inc (NYSE:GWB) is the least popular one with only 13 bullish hedge fund positions. Genworth Financial Inc (NYSE:GNW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNW is 46.3. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately GNW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GNW were disappointed as the stock returned 3.9% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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