We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Globe Life Inc. (NYSE:GL) and determine whether hedge funds skillfully traded this stock.
Is Globe Life Inc. (NYSE:GL) an excellent investment now? Money managers were in an optimistic mood. The number of long hedge fund bets increased by 11 recently. Globe Life Inc. (NYSE:GL) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GL 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.
In the financial world there are numerous signals market participants can use to value their holdings. Some of the most under-the-radar signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outclass the S&P 500 by a healthy margin (see the details here).
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Keeping this in mind we’re going to take a glance at the new hedge fund action regarding Globe Life Inc. (NYSE:GL).
What have hedge funds been doing with Globe Life Inc. (NYSE:GL)?
At the end of June, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the first quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in GL a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in Globe Life Inc. (NYSE:GL), which was worth $471.6 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $88.6 million worth of shares. Millennium Management, Pzena Investment Management, and Prospector 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 Prospector Partners allocated the biggest weight to Globe Life Inc. (NYSE:GL), around 2.71% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, setting aside 2.5 percent of its 13F equity portfolio to GL.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in Globe Life Inc. (NYSE:GL). Marshall Wace LLP had $7.5 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management also initiated a $5 million position during the quarter. The following funds were also among the new GL investors: Gregg Moskowitz’s Interval Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Globe Life Inc. (NYSE:GL) but similarly valued. These stocks are Universal Health Services, Inc. (NYSE:UHS), Paylocity Holding Corp (NASDAQ:PCTY), Regency Centers Corp (NASDAQ:REG), Generac Holdings Inc. (NYSE:GNRC), Elastic N.V. (NYSE:ESTC), Tenaris S.A. (NYSE:TS), and Weibo Corp (NASDAQ:WB). This group of stocks’ market caps match GL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UHS | 38 | 446238 | 8 |
| PCTY | 24 | 476733 | -9 |
| REG | 15 | 124124 | -3 |
| GNRC | 36 | 473108 | 7 |
| ESTC | 43 | 1385856 | 10 |
| TS | 12 | 204534 | -3 |
| WB | 14 | 92970 | 4 |
| Average | 26 | 457652 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $458 million. That figure was $706 million in GL’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Tenaris S.A. (NYSE:TS) is the least popular one with only 12 bullish hedge fund positions. Globe Life Inc. (NYSE:GL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GL is 73.9. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately GL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GL were disappointed as the stock returned 11.4% during the same time period 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.
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Disclosure: None. This article was originally published at Insider Monkey.
