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

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on The Allstate Corporation (NYSE:ALL).

Is The Allstate Corporation (NYSE:ALL) an exceptional investment today? The smart money is getting less bullish. The number of long hedge fund positions were cut by 11 in recent months. Our calculations also showed that ALL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). ALL was in 37 hedge funds’ portfolios at the end of December. There were 48 hedge funds in our database with ALL holdings at the end of the previous quarter.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the latest hedge fund action encompassing The Allstate Corporation (NYSE:ALL).

What have hedge funds been doing with The Allstate Corporation (NYSE:ALL)?

At the end of the fourth quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in ALL 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.

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the biggest position in The Allstate Corporation (NYSE:ALL), worth close to $689.8 million, comprising 0.8% of its total 13F portfolio. Sitting at the No. 2 spot is GLG Partners, managed by Noam Gottesman, which holds a $206.5 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain John Overdeck and David Siegel’s Two Sigma Advisors, Doug Silverman and Alexander Klabin’s Senator Investment Group and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Senator Investment Group allocated the biggest weight to The Allstate Corporation (NYSE:ALL), around 3.85% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, setting aside 2.48 percent of its 13F equity portfolio to ALL.

Judging by the fact that The Allstate Corporation (NYSE:ALL) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group said goodbye to the largest position of the 750 funds tracked by Insider Monkey, comprising about $196.1 million in stock. Steven Richman’s fund, East Side Capital (RR Partners), also cut its stock, about $30.1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 11 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Allstate Corporation (NYSE:ALL) but similarly valued. We will take a look at Constellation Brands, Inc. (NYSE:STZ), Telefonica S.A. (NYSE:TEF), Thomson Reuters Corporation (NYSE:TRI), and Newmont Corporation (NYSE:NEM). This group of stocks’ market caps match ALL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STZ 52 1980100 6
TEF 9 36499 4
TRI 21 343733 0
NEM 34 990094 -10
Average 29 837607 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $838 million. That figure was $1713 million in ALL’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 9 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. 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 1.0% in 2020 through May 1st but still beat the market by 12.9 percentage points. Hedge funds were also right about betting on ALL, though not to the same extent, as the stock returned -10.9% during the first four months of 2020 (through May 1st) and outperformed the market as well.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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