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 867 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 September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded AFLAC Incorporated (NYSE:AFL) and determine whether the smart money was really smart about this stock.
Is AFLAC Incorporated (NYSE:AFL) undervalued? Prominent investors were betting on the stock. The number of long hedge fund bets increased by 1 in recent months. AFLAC Incorporated (NYSE:AFL) was in 34 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that AFL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 33 hedge funds in our database with AFL positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s check out the key hedge fund action regarding AFLAC Incorporated (NYSE:AFL).
Robert Atchinson of Adage Capital Management
Do Hedge Funds Think AFL Is A Good Stock To Buy Now?
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in AFL a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Ariel Investments was the largest shareholder of AFLAC Incorporated (NYSE:AFL), with a stake worth $80.1 million reported as of the end of September. Trailing Ariel Investments was Citadel Investment Group, which amassed a stake valued at $24.2 million. Polar Capital, AQR Capital Management, and Adage Capital 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 Mountain Road Advisors allocated the biggest weight to AFLAC Incorporated (NYSE:AFL), around 1.28% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.73 percent of its 13F equity portfolio to AFL.
Consequently, key hedge funds were breaking ground themselves. TwinBeech Capital, managed by Jinghua Yan, established the largest position in AFLAC Incorporated (NYSE:AFL). TwinBeech Capital had $7.2 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $6.1 million investment in the stock during the quarter. The other funds with brand new AFL positions are Greg Eisner’s Engineers Gate Manager, Qing Li’s Sciencast Management, and Bruce Kovner’s Caxton Associates LP.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AFLAC Incorporated (NYSE:AFL) but similarly valued. These stocks are The Hershey Company (NYSE:HSY), NatWest Group plc (NYSE:NWG), Welltower Inc. (NYSE:WELL), TransDigm Group Incorporated (NYSE:TDG), Rockwell Automation Inc. (NYSE:ROK), First Republic Bank (NYSE:FRC), and International Flavors & Fragrances Inc (NYSE:IFF). This group of stocks’ market values resemble AFL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSY | 33 | 1274071 | -5 |
| NWG | 7 | 8068 | 2 |
| WELL | 22 | 508861 | 3 |
| TDG | 63 | 7188554 | 6 |
| ROK | 29 | 519693 | 4 |
| FRC | 35 | 918312 | 1 |
| IFF | 46 | 2838241 | -6 |
| Average | 33.6 | 1893686 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $1894 million. That figure was $224 million in AFL’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 7 bullish hedge fund positions. AFLAC Incorporated (NYSE:AFL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AFL is 58.4. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on AFL as the stock returned 21.2% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Aflac Inc (NYSE:AFL)
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Disclosure: None. This article was originally published at Insider Monkey.
