Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The Hanover Insurance Group, Inc. (NYSE:THG).
The Hanover Insurance Group, Inc. (NYSE:THG) was in 20 hedge funds’ portfolios at the end of the second quarter of 2019. THG has seen a decrease in support from the world’s most elite money managers in recent months. There were 23 hedge funds in our database with THG positions at the end of the previous quarter. Our calculations also showed that THG 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the key hedge fund action surrounding The Hanover Insurance Group, Inc. (NYSE:THG).
How are hedge funds trading The Hanover Insurance Group, Inc. (NYSE:THG)?
Heading into the third quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards THG over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of The Hanover Insurance Group, Inc. (NYSE:THG), with a stake worth $58.5 million reported as of the end of March. Trailing Citadel Investment Group was AQR Capital Management, which amassed a stake valued at $54.6 million. Two Sigma Advisors, Pzena Investment Management, and Gillson Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that The Hanover Insurance Group, Inc. (NYSE:THG) has faced bearish sentiment from hedge fund managers, logic holds that there is a sect of hedge funds that slashed their positions entirely in the second quarter. Interestingly, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth about $4.2 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund said goodbye to about $1.1 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds in the second quarter.
Let’s check out hedge fund activity in other stocks similar to The Hanover Insurance Group, Inc. (NYSE:THG). We will take a look at Williams-Sonoma, Inc. (NYSE:WSM), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), Crane Co. (NYSE:CR), and Deckers Outdoor Corporation (NYSE:DECK). This group of stocks’ market values are closest to THG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WSM | 27 | 304968 | -2 |
| TKC | 7 | 8268 | 0 |
| CR | 26 | 366248 | 4 |
| DECK | 25 | 610746 | -4 |
| Average | 21.25 | 322558 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $323 million. That figure was $255 million in THG’s case. Williams-Sonoma, Inc. (NYSE:WSM) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 7 bullish hedge fund positions. The Hanover Insurance Group, Inc. (NYSE:THG) 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 (view the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on THG as the stock returned 6.1% during the same time frame and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
