Was The Smart Money Right About Voya Financial Inc (VOYA)?

In this article you are going to find out whether hedge funds think Voya Financial Inc (NYSE:VOYA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Voya Financial Inc (NYSE:VOYA) was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 49. VOYA investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 49 hedge funds in our database with VOYA holdings at the end of September. Our calculations also showed that VOYA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are numerous formulas market participants use to grade stocks. A duo of the most underrated formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can beat the S&P 500 by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a peek at the recent hedge fund action encompassing Voya Financial Inc (NYSE:VOYA).

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

At the end of the fourth quarter, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the third quarter of 2020. On the other hand, there were a total of 43 hedge funds with a bullish position in VOYA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is VOYA A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Samlyn Capital, managed by Robert Pohly, holds the most valuable position in Voya Financial Inc (NYSE:VOYA). Samlyn Capital has a $311 million position in the stock, comprising 4.5% of its 13F portfolio. Sitting at the No. 2 spot is Richard S. Pzena of Pzena Investment Management, with a $270.8 million position; 1.3% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of Michael A. Price and Amos Meron’s Empyrean Capital Partners, Ken Griffin’s Citadel Investment Group and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Strycker View Capital allocated the biggest weight to Voya Financial Inc (NYSE:VOYA), around 7.12% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, dishing out 4.45 percent of its 13F equity portfolio to VOYA.

Judging by the fact that Voya Financial Inc (NYSE:VOYA) has faced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that elected to cut their full holdings last quarter. At the top of the heap, Emanuel J. Friedman’s EJF Capital sold off the biggest position of the 750 funds watched by Insider Monkey, worth close to $17.2 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $11 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 5 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Voya Financial Inc (NYSE:VOYA) but similarly valued. These stocks are Juniper Networks, Inc. (NYSE:JNPR), Cenovus Energy Inc (NYSE:CVE), Skillz Inc. (NYSE:SKLZ), InVitae Corporation (NYSE:NVTA), Bausch Health Companies (NYSE:BHC), US Foods Holding Corp. (NYSE:USFD), and Arrow Electronics, Inc. (NYSE:ARW). This group of stocks’ market values match VOYA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JNPR 31 414029 1
CVE 23 238423 5
SKLZ 33 719455 33
NVTA 35 3492478 11
BHC 43 2466124 3
USFD 44 1242823 3
ARW 27 764402 -1
Average 33.7 1333962 7.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $1334 million. That figure was $1190 million in VOYA’s case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Cenovus Energy Inc (NYSE:CVE) is the least popular one with only 23 bullish hedge fund positions. Voya Financial Inc (NYSE:VOYA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VOYA is 76.9. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on VOYA as the stock returned 15.6% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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