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Here’s What Hedge Funds Think About Alleghany Corporation (Y)

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Alleghany Corporation (NYSE:Y).

Alleghany Corporation (NYSE:Y) investors should be aware of an increase in hedge fund interest recently. Y was in 23 hedge funds’ portfolios at the end of March. There were 19 hedge funds in our database with Y holdings at the end of the previous quarter. Our calculations also showed that y isn’t among the 30 most popular stocks among hedge funds.

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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

We’re going to take a peek at the fresh hedge fund action encompassing Alleghany Corporation (NYSE:Y).

How are hedge funds trading Alleghany Corporation (NYSE:Y)?

Heading into the second quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the fourth quarter of 2018. On the other hand, there were a total of 20 hedge funds with a bullish position in Y a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

No of Hedge Funds with Y Positions

More specifically, Polar Capital was the largest shareholder of Alleghany Corporation (NYSE:Y), with a stake worth $75.2 million reported as of the end of March. Trailing Polar Capital was Royce & Associates, which amassed a stake valued at $57.8 million. AQR Capital Management, Renaissance Technologies, and Gillson Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, key money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in Alleghany Corporation (NYSE:Y). Point72 Asset Management had $11.2 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $1.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks similar to Alleghany Corporation (NYSE:Y). These stocks are Carvana Co. (NYSE:CVNA), DocuSign, Inc. (NASDAQ:DOCU), Qorvo Inc (NASDAQ:QRVO), and Zscaler, Inc. (NASDAQ:ZS). This group of stocks’ market caps are similar to Y’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVNA 41 1612623 7
DOCU 34 538816 11
QRVO 34 1200686 6
ZS 19 301088 2
Average 32 913303 6.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $913 million. That figure was $306 million in Y’s case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Zscaler, Inc. (NASDAQ:ZS) is the least popular one with only 19 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on Y as the stock returned 8.8% during the same time frame and outperformed the market by an even larger margin.

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

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