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Were Hedge Funds Right About Piling Into The Allstate Corporation (ALL)?

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 821 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 March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded The Allstate Corporation (NYSE:ALL) and determine whether the smart money was really smart about this stock.

The Allstate Corporation (NYSE:ALL) has seen an increase in enthusiasm from smart money recently. ALL was in 43 hedge funds’ portfolios at the end of March. There were 37 hedge funds in our database with ALL positions at the end of the previous quarter. Our calculations also showed that ALL isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the 21st century investor’s toolkit there are plenty of signals stock traders can use to assess publicly traded companies. A pair of the less known signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the S&P 500 by a healthy amount (see the details here).

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. 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 gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the fresh hedge fund action regarding The Allstate Corporation (NYSE:ALL).

What does smart money think about The Allstate Corporation (NYSE:ALL)?

At Q1’s end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ALL over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in The Allstate Corporation (NYSE:ALL), worth close to $554.4 million, comprising 0.9% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $162.2 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism consist of Noam Gottesman’s GLG Partners, Doug Silverman and Alexander Klabin’s Senator Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Senator Investment Group allocated the biggest weight to The Allstate Corporation (NYSE:ALL), around 3.49% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, designating 3.47 percent of its 13F equity portfolio to ALL.

With a general bullishness amongst the heavyweights, key money managers have jumped into The Allstate Corporation (NYSE:ALL) headfirst. Citadel Investment Group, managed by Ken Griffin, created the biggest position in The Allstate Corporation (NYSE:ALL). Citadel Investment Group had $162.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $72.3 million investment in the stock during the quarter. The following funds were also among the new ALL investors: Dmitry Balyasny’s Balyasny Asset Management, Brandon Haley’s Holocene Advisors, and John Murphy’s Levin Easterly Partners.

Let’s go over hedge fund activity in other stocks similar to The Allstate Corporation (NYSE:ALL). These stocks are Electronic Arts Inc. (NASDAQ:EA), Metlife Inc (NYSE:MET), WEC Energy Group, Inc. (NYSE:WEC), and The Hershey Company (NYSE:HSY). This group of stocks’ market caps are similar to ALL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EA 73 1987020 5
MET 34 1018231 -4
WEC 29 267388 14
HSY 33 958331 -6
Average 42.25 1057743 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $1058 million. That figure was $1536 million in ALL’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand WEC Energy Group, Inc. (NYSE:WEC) is the least popular one with only 29 bullish hedge fund positions. The Allstate Corporation (NYSE:ALL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately ALL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ALL were disappointed as the stock returned 6.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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