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Were Hedge Funds Right About Travelers Companies Inc (TRV)?

Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Travelers Companies Inc (NYSE:TRV).

Travelers Companies Inc (NYSE:TRV) investors should be aware of an increase in support from the world’s most elite money managers lately. TRV was in 39 hedge funds’ portfolios at the end of December. There were 38 hedge funds in our database with TRV holdings at the end of the previous quarter. Our calculations also showed that TRV 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).

To the average investor there are a lot of methods market participants use to size up publicly traded companies. Some of the most underrated methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the broader indices by a superb amount (see the details here).

Tom Gayner

Tom Gayner of Markel Gayner Asset Management

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. Now we’re going to take a look at the recent hedge fund action surrounding Travelers Companies Inc (NYSE:TRV).

How are hedge funds trading Travelers Companies Inc (NYSE:TRV)?

Heading into the first quarter of 2020, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in TRV a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Travelers Companies Inc (NYSE:TRV), which was worth $347.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $163.1 million worth of shares. Polar Capital, Balyasny Asset Management, and Markel Gayner Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Voleon Capital allocated the biggest weight to Travelers Companies Inc (NYSE:TRV), around 1.03% of its 13F portfolio. Arjuna Capital is also relatively very bullish on the stock, dishing out 0.94 percent of its 13F equity portfolio to TRV.

Consequently, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Travelers Companies Inc (NYSE:TRV). Balyasny Asset Management had $57.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $33.4 million investment in the stock during the quarter. The other funds with brand new TRV positions are Michael Kharitonov and Jon David McAuliffe’s Voleon Capital, Renaissance Technologies, and Matthew L Pinz’s Pinz Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Travelers Companies Inc (NYSE:TRV) but similarly valued. We will take a look at Canadian Pacific Railway Limited (NYSE:CP), Carnival Corporation & Plc (NYSE:CCL), Energy Transfer L.P. (NYSE:ET), and Monster Beverage Corp (NASDAQ:MNST). This group of stocks’ market caps resemble TRV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CP 29 1760164 -4
CCL 34 895329 4
ET 36 718963 2
MNST 45 3533015 9
Average 36 1726868 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1727 million. That figure was $906 million in TRV’s case. Monster Beverage Corp (NASDAQ:MNST) is the most popular stock in this table. On the other hand Canadian Pacific Railway Limited (NYSE:CP) is the least popular one with only 29 bullish hedge fund positions. Travelers Companies Inc (NYSE:TRV) 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately TRV wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TRV were disappointed as the stock returned -29.4% 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.
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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