With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Travelers Companies Inc (NYSE:TRV).
Travelers Companies Inc (NYSE:TRV) has seen a decrease in enthusiasm from smart money lately. Travelers Companies Inc (NYSE:TRV) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistic is 39. Our calculations also showed that TRV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV 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 we’re going to take a look at the recent hedge fund action encompassing Travelers Companies Inc (NYSE:TRV).
Do Hedge Funds Think TRV Is A Good Stock To Buy Now?
At second quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in TRV a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the number one position in Travelers Companies Inc (NYSE:TRV), worth close to $213.7 million, amounting to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $111 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to Travelers Companies Inc (NYSE:TRV), around 0.9% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, dishing out 0.48 percent of its 13F equity portfolio to TRV.
Because Travelers Companies Inc (NYSE:TRV) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of funds that decided to sell off their full holdings last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $15.9 million in stock. Peter Seuss’s fund, Prana Capital Management, also dropped its stock, about $4.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Travelers Companies Inc (NYSE:TRV) but similarly valued. We will take a look at Phillips 66 (NYSE:PSX), Okta, Inc. (NASDAQ:OKTA), International Flavors & Fragrances Inc (NYSE:IFF), General Mills, Inc. (NYSE:GIS), Peloton Interactive, Inc. (NASDAQ:PTON), The Trade Desk, Inc. (NASDAQ:TTD), and Motorola Solutions Inc (NYSE:MSI). This group of stocks’ market caps are closest to TRV’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $2105 million. That figure was $579 million in TRV’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand The Trade Desk, Inc. (NASDAQ:TTD) is the least popular one with only 25 bullish hedge fund positions. Travelers Companies Inc (NYSE:TRV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRV is 40.9. 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. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on TRV as the stock returned 4.9% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.