Hedge Funds Are Selling State Auto Financial (STFC)

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Because State Auto Financial (NASDAQ:STFC) has witnessed a declination in interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers who sold off their positions entirely heading into Q4. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth about $0.4 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $0.3 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to State Auto Financial (NASDAQ:STFC). We will take a look at Textainer Group Holdings Limited (NYSE:TGH), Inogen Inc (NASDAQ:INGN), Changyou.Com Ltd (ADR) (NASDAQ:CYOU), and NetGear, Inc. (NASDAQ:NTGR). All of these stocks’ market caps match State Auto Financial (NASDAQ:STFC)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TGH 7 6582 -1
INGN 18 90344 2
CYOU 9 13441 -3
NTGR 20 99055 9

As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $25 million in State Auto Financial (NASDAQ:STFC)’s case. NetGear, Inc. (NASDAQ:NTGR) is the most popular stock in this table. On the other hand, Textainer Group Holdings Limited (NYSE:TGH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks, State Auto Financial (NASDAQ:STFC) is even less popular than Textainer Group Holdings Limited (NYSE:TGH). 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.

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