Is TRV A Good Stock To Buy Now?

In this article we will analyze whether Travelers Companies Inc (NYSE:TRV) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is TRV a good stock to buy now? Hedge funds were becoming hopeful. The number of long hedge fund bets increased by 7 recently. Travelers Companies Inc (NYSE:TRV) was in 35 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 39. Our calculations also showed that TRV 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). There were 28 hedge funds in our database with TRV holdings at the end of June.

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.


Paul Tudor Jones of Tudor Investment Corp

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. Now let’s check out the key hedge fund action encompassing Travelers Companies Inc (NYSE:TRV).

Do Hedge Funds Think TRV Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in TRV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TRV A Good Stock To Buy?

The largest stake in Travelers Companies Inc (NYSE:TRV) was held by AQR Capital Management, which reported holding $104.4 million worth of stock at the end of September. It was followed by Polar Capital with a $74.7 million position. Other investors bullish on the company included Millennium Management, Alyeska Investment Group, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Discovery Capital Management allocated the biggest weight to Travelers Companies Inc (NYSE:TRV), around 2.55% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, designating 0.56 percent of its 13F equity portfolio to TRV.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, assembled the most valuable position in Travelers Companies Inc (NYSE:TRV). Alyeska Investment Group had $35.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $19.9 million position during the quarter. The following funds were also among the new TRV investors: Paul Tudor Jones’s Tudor Investment Corp, Qing Li’s Sciencast Management, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Travelers Companies Inc (NYSE:TRV) but similarly valued. These stocks are Okta, Inc. (NASDAQ:OKTA), V.F. Corporation (NYSE:VFC), Waste Connections, Inc. (NYSE:WCN), Ball Corporation (NYSE:BLL), Otis Worldwide Corporation (NYSE:OTIS), Manulife Financial Corporation (NYSE:MFC), and Willis Towers Watson Public Limited Company (NASDAQ:WLTW). This group of stocks’ market caps are closest to TRV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OKTA 51 1875052 -9
VFC 22 457655 -5
WCN 32 544857 -7
BLL 33 932801 -5
OTIS 53 2224926 -3
MFC 21 196746 2
WLTW 51 2617710 2
Average 37.6 1264250 -3.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $1264 million. That figure was $419 million in TRV’s case. Otis Worldwide Corporation (NYSE:OTIS) is the most popular stock in this table. On the other hand Manulife Financial Corporation (NYSE:MFC) is the least popular one with only 21 bullish hedge fund positions. Travelers Companies Inc (NYSE:TRV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRV is 58.8. 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. A small number of hedge funds were also right about betting on TRV as the stock returned 29.2% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.