Here is What Hedge Funds Think About Sun Life Financial Inc. (USA) (SLF)

If you were to ask many traders, hedge funds are seen as bloated, outdated financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey looks at the masters of this club, around 525 funds. Analysts calculate that this group oversees the majority of all hedge funds’ total assets, and by paying attention to their best investments, we’ve identified a few investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is a second way to look at the financial markets. Obviously, there are a variety of incentives for a bullish insider to downsize shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the useful potential of this tactic if “monkeys” understand what to do (learn more here).

Keeping this in mind, let’s analyze the recent info about Sun Life Financial Inc. (USA) (NYSE:SLF).

How are hedge funds trading Sun Life Financial Inc. (USA) (NYSE:SLF)?

Heading into Q3, a total of 5 of the hedge funds we track held long positions in this stock, a change of -44% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly.

When using filings from the hedgies we track, John Thiessen’s Vertex One Asset Management had the largest position in Sun Life Financial Inc. (USA) (NYSE:SLF), worth close to $1.5 million, accounting for 0.3% of its total 13F portfolio. Coming in second is Ken Gray and Steve Walsh of Bryn Mawr Capital, with a $1.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Cliff Asness’s AQR Capital Management, and Eric Halet and Davide Serra’s Algebris Investments.

Due to the fact Sun Life Financial Inc. (USA) (NYSE:SLF) has witnessed dropping sentiment from upper-tier hedge fund managers, logic holds that there were a few fund managers who sold off their entire stakes heading into Q2. Interestingly, Ken Griffin’s Citadel Investment Group sold off the largest investment of all the hedgies we monitor, valued at about $4.6 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $3.5 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds heading into Q2.

How have insiders been trading Sun Life Financial Inc. (USA) (NYSE:SLF)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time period, Sun Life Financial Inc. (USA) (NYSE:SLF) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Sun Life Financial Inc. (USA) (NYSE:SLF). These stocks are Lincoln National Corporation (NYSE:LNC), ING Groep N.V. (ADR) (NYSE:ING), Prudential Financial Inc (NYSE:PRU), Manulife Financial Corporation (USA) (NYSE:MFC), and AEGON N.V. (ADR) (NYSE:AEG). All of these stocks are in the life insurance industry and their market caps match SLF’s market cap.

Using the returns demonstrated by the previously mentioned research, regular investors must always track hedge fund and insider trading sentiment, and Sun Life Financial Inc. (USA) (NYSE:SLF) applies perfectly to this mantra.

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