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. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Selective Insurance Group, Inc. (NASDAQ:SIGI).
Is SIGI a good stock to buy now? The best stock pickers were taking an optimistic view. The number of long hedge fund positions increased by 8 recently. Selective Insurance Group, Inc. (NASDAQ:SIGI) was in 21 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 26. Our calculations also showed that SIGI 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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 view the recent hedge fund action surrounding Selective Insurance Group, Inc. (NASDAQ:SIGI).
Do Hedge Funds Think SIGI Is A Good Stock To Buy Now?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 62% from the second quarter of 2020. On the other hand, there were a total of 26 hedge funds with a bullish position in SIGI a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in Selective Insurance Group, Inc. (NASDAQ:SIGI) was held by Prospector Partners, which reported holding $12.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $11.5 million position. Other investors bullish on the company included Royce & Associates, Millennium Management, and D E Shaw. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Selective Insurance Group, Inc. (NASDAQ:SIGI), around 1.83% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to SIGI.
Consequently, some big names were breaking ground themselves. Paloma Partners, managed by Donald Sussman, initiated the biggest position in Selective Insurance Group, Inc. (NASDAQ:SIGI). Paloma Partners had $1.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.5 million position during the quarter. The other funds with brand new SIGI positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Greg Eisner’s Engineers Gate Manager, and Peter Muller’s PDT Partners.
Let’s now review hedge fund activity in other stocks similar to Selective Insurance Group, Inc. (NASDAQ:SIGI). These stocks are 51job, Inc. (NASDAQ:JOBS), National Vision Holdings, Inc. (NASDAQ:EYE), Altair Engineering Inc. (NASDAQ:ALTR), The Ensign Group, Inc. (NASDAQ:ENSG), Millicom International Cellular S.A. (NASDAQ:TIGO), Artisan Partners Asset Management Inc (NYSE:APAM), and Glacier Bancorp, Inc. (NASDAQ:GBCI). This group of stocks’ market valuations resemble SIGI’s market valuation.
|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 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $55 million in SIGI’s case. Artisan Partners Asset Management Inc (NYSE:APAM) is the most popular stock in this table. On the other hand Millicom International Cellular S.A. (NASDAQ:TIGO) is the least popular one with only 8 bullish hedge fund positions. Selective Insurance Group, Inc. (NASDAQ:SIGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIGI is 70.3. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on SIGI as the stock returned 29% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.