Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about RenaissanceRe Holdings Ltd. (NYSE:RNR).
Is RNR stock a buy or sell? The smart money was taking an optimistic view. The number of long hedge fund positions moved up by 2 recently. RenaissanceRe Holdings Ltd. (NYSE:RNR) was in 39 hedge funds’ portfolios at the end of December. The all time high for this statistic is 41. Our calculations also showed that RNR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 37 hedge funds in our database with RNR positions at the end of the third quarter.
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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Now let’s go over the key hedge fund action regarding RenaissanceRe Holdings Ltd. (NYSE:RNR).
Do Hedge Funds Think RNR Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RNR over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in RenaissanceRe Holdings Ltd. (NYSE:RNR) was held by Samlyn Capital, which reported holding $112.3 million worth of stock at the end of December. It was followed by Polar Capital with a $94 million position. Other investors bullish on the company included Diamond Hill Capital, Renaissance Technologies, and AQR Capital Management. In terms of the portfolio weights assigned to each position BlueMar Capital Management allocated the biggest weight to RenaissanceRe Holdings Ltd. (NYSE:RNR), around 6.82% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, earmarking 5.11 percent of its 13F equity portfolio to RNR.
Consequently, some big names were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the biggest position in RenaissanceRe Holdings Ltd. (NYSE:RNR). Adage Capital Management had $21.6 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $15 million position during the quarter. The other funds with brand new RNR positions are Daniel Johnson’s Gillson Capital, Nicholas Bagnall’s Te Ahumairangi Investment Management, and Allon Hellmann’s Full18 Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as RenaissanceRe Holdings Ltd. (NYSE:RNR) but similarly valued. We will take a look at Lamar Advertising Company (NASDAQ:LAMR), Inphi Corporation (NYSE:IPHI), Carlisle Companies, Inc. (NYSE:CSL), Gentex Corporation (NASDAQ:GNTX), Arch Coal Inc (NYSE:ACI), SEI Investments Company (NASDAQ:SEIC), and Sensata Technologies Holding plc (NYSE:ST). This group of stocks’ market values match RNR’s market value.
|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 30 hedge funds with bullish positions and the average amount invested in these stocks was $1047 million. That figure was $669 million in RNR’s case. Lamar Advertising Company (NASDAQ:LAMR) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks RenaissanceRe Holdings Ltd. (NYSE:RNR) is more popular among hedge funds. Our overall hedge fund sentiment score for RNR is 85.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately RNR wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on RNR were disappointed as the stock returned -1.8% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Renaissancere Holdings Ltd (NYSE:RNR)
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Disclosure: None. This article was originally published at Insider Monkey.