As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Reinsurance Group of America Inc (NYSE:RGA).
Reinsurance Group of America Inc (NYSE:RGA) investors should be aware of an increase in hedge fund interest recently. Reinsurance Group of America Inc (NYSE:RGA) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistic is 33. There were 27 hedge funds in our database with RGA positions at the end of the first quarter. Our calculations also showed that RGA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Keeping this in mind let’s take a glance at the recent hedge fund action encompassing Reinsurance Group of America Inc (NYSE:RGA).
Do Hedge Funds Think RGA Is A Good Stock To Buy Now?
At the end of June, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in RGA 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.
More specifically, Polar Capital was the largest shareholder of Reinsurance Group of America Inc (NYSE:RGA), with a stake worth $65.6 million reported as of the end of June. Trailing Polar Capital was Pzena Investment Management, which amassed a stake valued at $54.1 million. Diamond Hill Capital, Citadel Investment Group, and Prana 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 Prana Capital Management allocated the biggest weight to Reinsurance Group of America Inc (NYSE:RGA), around 2.46% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, earmarking 1.24 percent of its 13F equity portfolio to RGA.
Consequently, key money managers have jumped into Reinsurance Group of America Inc (NYSE:RGA) headfirst. Sciencast Management, managed by Qing Li, initiated the most outsized position in Reinsurance Group of America Inc (NYSE:RGA). Sciencast Management had $0.4 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates LP also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Reinsurance Group of America Inc (NYSE:RGA) but similarly valued. We will take a look at Skechers USA Inc (NYSE:SKX), Tempur Sealy International Inc. (NYSE:TPX), Anaplan, Inc. (NYSE:PLAN), PVH Corp (NYSE:PVH), Lattice Semiconductor Corporation (NASDAQ:LSCC), LG Display Co Ltd. (NYSE:LPL), and Churchill Downs Incorporated (NASDAQ:CHDN). All of these stocks’ market caps are similar to RGA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SKX | 35 | 772836 | 6 |
| TPX | 35 | 1096506 | -2 |
| PLAN | 52 | 2141802 | -3 |
| PVH | 28 | 1759709 | -6 |
| LSCC | 24 | 306527 | 0 |
| LPL | 7 | 27354 | -2 |
| CHDN | 35 | 694267 | 16 |
| Average | 30.9 | 971286 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $971 million. That figure was $415 million in RGA’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 7 bullish hedge fund positions. Reinsurance Group of America Inc (NYSE:RGA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RGA is 54.8. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on RGA as the stock returned 6.7% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.
Follow Reinsurance Group Of America Inc (NYSE:RGA)
Follow Reinsurance Group Of America Inc (NYSE:RGA)
Suggested Articles:
- 15 Largest Transportation Companies In The World
- 10 Best Restaurant Stocks To Buy
- 50 Most Beautiful Cities in the US
Disclosure: None. This article was originally published at Insider Monkey.
