The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Everest Re Group Ltd (NYSE:RE).
Is RE a good stock to buy? Everest Re Group Ltd (NYSE:RE) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Everest Re Group Ltd (NYSE:RE) was in 36 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 29 hedge funds in our database with RE holdings at the end of June. Our calculations also showed that RE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to analyze the new hedge fund action encompassing Everest Re Group Ltd (NYSE:RE).
Do Hedge Funds Think RE Is A Good Stock To Buy Now?
At third quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from the second quarter of 2020. On the other hand, there were a total of 23 hedge funds with a bullish position in RE a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Everest Re Group Ltd (NYSE:RE). AQR Capital Management has a $145.4 million position in the stock, comprising 0.2% of its 13F portfolio. On AQR Capital Management’s heels is Andreas Halvorsen of Viking Global, with a $130.4 million position; 0.5% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism encompass Mason Hawkins’s Southeastern Asset Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Southeastern Asset Management allocated the biggest weight to Everest Re Group Ltd (NYSE:RE), around 2.04% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, earmarking 1.89 percent of its 13F equity portfolio to RE.
Now, some big names were leading the bulls’ herd. Southeastern Asset Management, managed by Mason Hawkins, established the most outsized position in Everest Re Group Ltd (NYSE:RE). Southeastern Asset Management had $79.1 million invested in the company at the end of the quarter. Peter Seuss’s Prana Capital Management also initiated a $7 million position during the quarter. The following funds were also among the new RE investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John D. Gillespie’s Prospector Partners, and John A. Levin’s Levin Capital Strategies.
Let’s now review hedge fund activity in other stocks similar to Everest Re Group Ltd (NYSE:RE). We will take a look at Royal Gold, Inc (NASDAQ:RGLD), OneConnect Financial Technology Co., Ltd. (NYSE:OCFT), Bentley Systems, Incorporated (NASDAQ:BSY), Nikola Corporation (NASDAQ:NKLA), Floor & Decor Holdings, Inc. (NYSE:FND), Repligen Corporation (NASDAQ:RGEN), and Wynn Resorts, Limited (NASDAQ:WYNN). All of these stocks’ market caps resemble RE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $442 million. That figure was $526 million in RE’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) is the least popular one with only 11 bullish hedge fund positions. Everest Re Group Ltd (NYSE:RE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RE is 79.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on RE as the stock returned 18.5% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.