Was The Smart Money Right About Betting On The Allstate Corporation (ALL)?

Abigail Fisher
·6 min read

Is The Allstate Corporation (NYSE:ALL) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

The Allstate Corporation (NYSE:ALL) shareholders have witnessed an increase in hedge fund interest in recent months. The Allstate Corporation (NYSE:ALL) was in 46 hedge funds' portfolios at the end of June. The all time high for this statistics is 48. There were 43 hedge funds in our database with ALL holdings at the end of March. Our calculations also showed that ALL isn't among the 30 most popular stocks among hedge funds (click for Q2 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.

To most market participants, hedge funds are seen as unimportant, old investment tools of years past. While there are greater than 8000 funds in operation today, Our researchers hone in on the moguls of this club, approximately 850 funds. It is estimated that this group of investors control most of the hedge fund industry's total asset base, and by keeping an eye on their inimitable investments, Insider Monkey has uncovered several investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Andreas Halvorsen
Andreas Halvorsen

Andreas Halvorsen of Viking Global

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now let's view the new hedge fund action surrounding The Allstate Corporation (NYSE:ALL).

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

At second quarter's end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALL over the last 20 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is ALL A Good Stock To Buy?
Is ALL A Good Stock To Buy?

Among these funds, AQR Capital Management held the most valuable stake in The Allstate Corporation (NYSE:ALL), which was worth $440.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $322.3 million worth of shares. Viking Global, GLG Partners, and Two Sigma Advisors 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 Prana Capital Management allocated the biggest weight to The Allstate Corporation (NYSE:ALL), around 5.5% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, designating 0.87 percent of its 13F equity portfolio to ALL.

Consequently, specific money managers have been driving this bullishness. Viking Global, managed by Andreas Halvorsen, created the most outsized position in The Allstate Corporation (NYSE:ALL). Viking Global had $171.6 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors also initiated a $5.1 million position during the quarter. The other funds with brand new ALL positions are Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, Paul Tudor Jones's Tudor Investment Corp, and Alec Litowitz and Ross Laser's Magnetar Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as The Allstate Corporation (NYSE:ALL) but similarly valued. These stocks are Match Group, Inc. (NASDAQ:MTCH), Ross Stores, Inc. (NASDAQ:ROST), Dow Inc. (NYSE:DOW), KLA Corporation (NASDAQ:KLAC), ICICI Bank Limited (NYSE:IBN), IHS Markit Ltd. (NYSE:INFO), and Canadian Imperial Bank of Commerce (NYSE:CM). All of these stocks' market caps resemble ALL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTCH,39,1755544,1 ROST,50,767478,1 DOW,35,452224,-3 KLAC,37,661971,11 IBN,20,231584,-4 INFO,44,1532350,0 CM,6,158840,-4 Average,33,794284,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $1452 million in ALL's case. Ross Stores, Inc. (NASDAQ:ROST) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 6 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 overall hedge fund sentiment score for ALL is 82.2. 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. 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 30% in 2020 through October 23rd and beat the market by 21 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 -5.4% since the end of June (through 10/23) 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.

Get real-time email alerts: Follow Allstate Corp (NYSE:ALL)

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

Related Content