Is Globe Life Inc. (GL) Going to Burn These Hedge Funds?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Globe Life Inc. (NYSE:GL).

Globe Life Inc. (NYSE:GL) has experienced a decrease in activity from the world’s largest hedge funds recently. Globe Life Inc. (NYSE:GL) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 33. There were 28 hedge funds in our database with GL positions at the end of the second quarter. Our calculations also showed that GL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to take a gander at the new hedge fund action regarding Globe Life Inc. (NYSE:GL).

Matthew Hulsizer of PEAK6 Capital

Do Hedge Funds Think GL Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in GL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the most valuable position in Globe Life Inc. (NYSE:GL), worth close to $565.7 million, amounting to 0.2% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $39.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism comprise Richard S. Pzena’s Pzena Investment Management, John D. Gillespie’s Prospector Partners and Martin D. Sass’s MD Sass. In terms of the portfolio weights assigned to each position MD Sass allocated the biggest weight to Globe Life Inc. (NYSE:GL), around 3.28% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 2.51 percent of its 13F equity portfolio to GL.

Seeing as Globe Life Inc. (NYSE:GL) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes heading into Q4. Interestingly, Peter Seuss’s Prana Capital Management dumped the largest position of the 750 funds followed by Insider Monkey, totaling an estimated $9.4 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $6.4 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Globe Life Inc. (NYSE:GL) but similarly valued. We will take a look at Syneos Health, Inc. (NASDAQ:SYNH), Reliance Steel & Aluminum Co. (NYSE:RS), GXO Logistics Inc. (NYSE:GXO), Crocs, Inc. (NASDAQ:CROX), First Horizon Corporation (NYSE:FHN), Juniper Networks, Inc. (NYSE:JNPR), and Oatly Group AB (NASDAQ:OTLY). This group of stocks’ market caps match GL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $531 million. That figure was $776 million in GL’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Oatly Group AB (NASDAQ:OTLY) is the least popular one with only 13 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 57.7. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately GL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GL were disappointed as the stock returned 3.2% since the end of September (through 12/9) 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.

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Disclosure: None. This article was originally published at Insider Monkey.