Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Argo Group International Holdings, Ltd. (NASDAQ:AGII) to find out whether it was one of their high conviction long-term ideas.
Argo Group International Holdings, Ltd. (NASDAQ:AGII) was in 20 hedge funds’ portfolios at the end of the third quarter of 2015. AGII has experienced an increase in enthusiasm from smart money in recent months. There were 17 hedge funds in our database with AGII holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as 21Vianet Group Inc (NASDAQ:VNET), Galapagos NV (ADR) (NASDAQ:GLPG), and Commercial Metals Company (NYSE:CMC) to gather more data points.
In the financial world there are a lot of gauges shareholders put to use to appraise publicly traded companies. A pair of the less known gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can outperform the broader indices by a healthy amount (see the details here).
Now, let’s take a look at the key action regarding Argo Group International Holdings, Ltd. (NASDAQ:AGII).
What have hedge funds been doing with Argo Group International Holdings, Ltd. (NASDAQ:AGII)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the most valuable position in Argo Group International Holdings, Ltd. (NASDAQ:AGII), worth close to $26 million, amounting to 0.2% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $16.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management.
As aggregate interest increased, some big names have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, established the most valuable position in Argo Group International Holdings, Ltd. (NASDAQ:AGII). Renaissance Technologies had $1.2 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new AGII investors: Matthew Tewksbury’s Stevens Capital Management and Thomas Bailard’s Bailard Inc.
Let’s go over hedge fund activity in other stocks similar to Argo Group International Holdings, Ltd. (NASDAQ:AGII). These stocks are 21Vianet Group Inc (NASDAQ:VNET), Galapagos NV (ADR) (NASDAQ:GLPG), Commercial Metals Company (NYSE:CMC), and Universal Display Corporation (NASDAQ:OLED). This group of stocks’ market caps resemble AGII’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $115 million in AGII’s case. Commercial Metals Company (NYSE:CMC) is the most popular stock in this table. On the other hand Galapagos NV (ADR) (NASDAQ:GLPG) is the least popular one with only 11 bullish hedge fund positions. Argo Group International Holdings, Ltd. (NASDAQ:AGII) is among the most popular stocks in this group, making it worthy of a closer look.