Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is XL Group plc (NYSE:XL) the right pick for your portfolio? Hedge funds are becoming more confident. The number of long hedge fund bets rose by 8 lately. XL was in 37 hedge funds’ portfolios at the end of September. There were 29 hedge funds in our database with XL holdings at the end of the previous quarter. At the end of this article we will also compare XL to other stocks including Xilinx, Inc. (NASDAQ:XLNX), KeyCorp (NYSE:KEY), and Laboratory Corp. of America Holdings (NYSE:LH) to get a better sense of its popularity.
Now, let’s go over the recent action surrounding XL Group plc (NYSE:XL).
How are hedge funds trading XL Group plc (NYSE:XL)?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the second quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in XL Group plc (NYSE:XL). Pzena Investment Management has a $220 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is Steven Richman of East Side Capital (RR Partners), with a $152.1 million position; 6.5% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of Robert Pohly’s Samlyn Capital, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.