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Hedge Funds Done Buying Genworth Financial Inc (GNW)?

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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Genworth Financial Inc (NYSE:GNW).

Hedge fund interest in Genworth Financial Inc (NYSE:GNW) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare GNW to other stocks including Option Care Health, Inc. (NASDAQ:OPCH), Spectrum Brands Holdings, Inc. (NYSE:SPB), and LCI Industries (NYSE:LCII) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are plenty of indicators market participants put to use to evaluate publicly traded companies. A pair of the most innovative indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce the S&P 500 by a significant amount (see the details here).

Bill Miller

Bill Miller of Miller Value Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the key hedge fund action regarding Genworth Financial Inc (NYSE:GNW).

How have hedgies been trading Genworth Financial Inc (NYSE:GNW)?

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in GNW a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is GNW A Good Stock To Buy?

The largest stake in Genworth Financial Inc (NYSE:GNW) was held by TIG Advisors, which reported holding $49.6 million worth of stock at the end of September. It was followed by Miller Value Partners with a $47.4 million position. Other investors bullish on the company included Pentwater Capital Management, Shah Capital Management, and Maso Capital. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to Genworth Financial Inc (NYSE:GNW), around 21.08% of its 13F portfolio. Shah Capital Management is also relatively very bullish on the stock, earmarking 17.42 percent of its 13F equity portfolio to GNW.

Judging by the fact that Genworth Financial Inc (NYSE:GNW) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers that decided to sell off their full holdings in the first quarter. Interestingly, Frank Brosens’s Taconic Capital said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, totaling an estimated $7.2 million in stock. David MacKnight’s fund, One Fin Capital Management, also dropped its stock, about $1.8 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Genworth Financial Inc (NYSE:GNW) but similarly valued. We will take a look at Option Care Health, Inc. (NASDAQ:OPCH), Spectrum Brands Holdings, Inc. (NYSE:SPB), LCI Industries (NYSE:LCII), and Moog Inc (NYSE:MOG). This group of stocks’ market valuations are closest to GNW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OPCH 7 12260 -7
SPB 24 207647 -21
LCII 15 77500 -2
MOG 20 68438 -1
Average 16.5 91461 -7.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $259 million in GNW’s case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand Option Care Health, Inc. (NASDAQ:OPCH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Genworth Financial Inc (NYSE:GNW) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately GNW wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GNW were disappointed as the stock returned -8.1% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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