Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about The Travelers Companies, Inc. (NYSE:TRV) in this article.
The Travelers Companies, Inc. (NYSE:TRV) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 29 hedge funds’ portfolios at the end of March. At the end of this article we will also compare TRV to other stocks including Humana Inc (NYSE:HUM), Carnival plc (NYSE:CUK), and BB&T Corporation (NYSE:BBT) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a peek at the key hedge fund action regarding The Travelers Companies, Inc. (NYSE:TRV).
How are hedge funds trading The Travelers Companies, Inc. (NYSE:TRV)?
At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in TRV a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Travelers Companies, Inc. (NYSE:TRV) was held by Berkshire Hathaway, which reported holding $817.3 million worth of stock at the end of March. It was followed by AQR Capital Management with a $161.5 million position. Other investors bullish on the company included Polar Capital, Markel Gayner Asset Management, and Two Sigma Advisors.
Because The Travelers Companies, Inc. (NYSE:TRV) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies who sold off their positions entirely in the third quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest stake of the 700 funds watched by Insider Monkey, totaling an estimated $70.6 million in stock. Clint Carlson’s fund, Carlson Capital, also said goodbye to its stock, about $16.6 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to The Travelers Companies, Inc. (NYSE:TRV). We will take a look at Humana Inc (NYSE:HUM), Carnival plc (NYSE:CUK), BB&T Corporation (NYSE:BBT), and Roper Technologies, Inc. (NYSE:ROP). This group of stocks’ market caps are similar 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 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $1014 million. That figure was $1262 million in TRV’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Carnival plc (NYSE:CUK) is the least popular one with only 8 bullish hedge fund positions. The Travelers Companies, Inc. (NYSE:TRV) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on TRV as the stock returned 6.2% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.