In this article we will check out the progression of hedge fund sentiment towards Lincoln National Corporation (NYSE:LNC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Lincoln National Corporation (NYSE:LNC) a first-rate investment right now? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund bets were trimmed by 14 in recent months. Our calculations also showed that LNC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). LNC was in 26 hedge funds’ portfolios at the end of the first quarter of 2020. There were 40 hedge funds in our database with LNC holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are perceived as unimportant, old financial tools of yesteryear. While there are more than 8000 funds trading at present, Our experts look at the elite of this club, around 850 funds. These money managers command the lion’s share of the smart money’s total capital, and by keeping track of their highest performing equity investments, Insider Monkey has revealed various investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the new hedge fund action surrounding Lincoln National Corporation (NYSE:LNC).
Hedge fund activity in Lincoln National Corporation (NYSE:LNC)
Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -35% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LNC over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Southport Management held the most valuable stake in Lincoln National Corporation (NYSE:LNC), which was worth $263.2 million at the end of the third quarter. On the second spot was Lyrical Asset Management which amassed $121.9 million worth of shares. Arrowstreet Capital, East Side Capital (RR Partners), and GLG Partners 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 East Side Capital (RR Partners) allocated the biggest weight to Lincoln National Corporation (NYSE:LNC), around 6.04% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, earmarking 3 percent of its 13F equity portfolio to LNC.
Seeing as Lincoln National Corporation (NYSE:LNC) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedgies that decided to sell off their full holdings last quarter. Interestingly, John Murphy’s Levin Easterly Partners cut the biggest stake of the 750 funds monitored by Insider Monkey, worth an estimated $75.2 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $62.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 14 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Lincoln National Corporation (NYSE:LNC). We will take a look at Lamar Advertising Company (NASDAQ:LAMR), ON Semiconductor Corporation (NASDAQ:ON), Aegon N.V. (NYSE:AEG), and United Microelectronics Corp (NYSE:UMC). This group of stocks’ market caps resemble LNC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAMR | 34 | 217189 | 6 |
| ON | 29 | 153091 | -3 |
| AEG | 4 | 16681 | -2 |
| UMC | 15 | 98878 | 1 |
| Average | 20.5 | 121460 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $602 million in LNC’s case. Lamar Advertising Company (NASDAQ:LAMR) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Lincoln National Corporation (NYSE:LNC) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on LNC as the stock returned 45.9% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
