Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Lincoln National Corporation (NYSE:LNC).
Hedge fund interest in Lincoln National Corporation (NYSE:LNC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that LNC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as RPM International Inc. (NYSE:RPM), Banco de Chile (NYSE:BCH), and Sibanye Stillwater Limited (NYSE:SBSW) to gather more data points.
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Ryan Tolkin, CIO of Schonfeld Strategic Advisors
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Do Hedge Funds Think LNC Is A Good Stock To Buy Now?
At first quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in LNC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Lyrical Asset Management held the most valuable stake in Lincoln National Corporation (NYSE:LNC), which was worth $307.4 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $151.3 million worth of shares. East Side Capital (RR Partners), Schonfeld Strategic Advisors, 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 East Side Capital (RR Partners) allocated the biggest weight to Lincoln National Corporation (NYSE:LNC), around 7.62% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, earmarking 3.61 percent of its 13F equity portfolio to LNC.
Seeing as Lincoln National Corporation (NYSE:LNC) has witnessed declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of fund managers who sold off their positions entirely in the first quarter. Interestingly, Renaissance Technologies dumped the largest investment of the 750 funds monitored by Insider Monkey, valued at about $5 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also sold off its stock, about $1.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Lincoln National Corporation (NYSE:LNC). We will take a look at RPM International Inc. (NYSE:RPM), Banco de Chile (NYSE:BCH), Sibanye Stillwater Limited (NYSE:SBSW), Host Hotels and Resorts Inc (NASDAQ:HST), Fidelity National Financial Inc (NYSE:FNF), Tuya Inc. (NYSE:TUYA), and Zai Lab Limited (NASDAQ:ZLAB). This group of stocks’ market valuations resemble LNC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RPM | 20 | 79868 | -5 |
| BCH | 5 | 53333 | 2 |
| SBSW | 16 | 272595 | -1 |
| HST | 25 | 240687 | 3 |
| FNF | 39 | 1164238 | -1 |
| TUYA | 15 | 231919 | 15 |
| ZLAB | 32 | 666075 | 2 |
| Average | 21.7 | 386959 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $715 million in LNC’s case. Fidelity National Financial Inc (NYSE:FNF) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 5 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 overall hedge fund sentiment score for LNC is 77.6. 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 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately LNC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LNC were disappointed as the stock returned 6% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Lincoln National Corp (NYSE:LNC)
Follow Lincoln National Corp (NYSE:LNC)
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Disclosure: None. This article was originally published at Insider Monkey.
