Is Lincoln National Corporation (LNC) Going to Burn These Hedge Funds?

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Lincoln National Corporation (NYSE:LNC).

Lincoln National Corporation (NYSE:LNC) was in 35 hedge funds’ portfolios at the end of September. LNC has experienced an increase in hedge fund sentiment of late. There were 25 hedge funds in our database with LNC positions at the end of the previous quarter. At the end of this article we will also compare LNC to other stocks, including Vulcan Materials Company (NYSE:VMC), Host Hotels and Resorts Inc (NYSE:HST), and Concho Resources Inc. (NYSE:CXO) to get a better sense of its popularity.

In the 21st century investor’s toolkit there are tons of signals stock traders use to size up publicly traded companies. Two of the best signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outpace the market by a solid margin (see the details here).

With all of this in mind, we’re going to take a peek at the latest action surrounding Lincoln National Corporation (NYSE:LNC).

Hedge fund activity in Lincoln National Corporation (NYSE:LNC)

Heading into Q4, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, East Side Capital (RR Partners), managed by Steven Richman, holds the number one position in Lincoln National Corporation (NYSE:LNC). East Side Capital (RR Partners) has a $200.1 million position in the stock, comprising 8.6% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $114 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of Cliff Asness’ AQR Capital Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Now, key hedge funds have been driving this bullishness. Capital Returns Management, managed by Ron Bobman, assembled the most outsized position in Lincoln National Corporation (NYSE:LNC). Capital Returns Management had $16.4 million invested in the company at the end of the quarter. Millennium Management Subsidiary’s Blue Arrow Capital Management also initiated a $10.9 million position during the quarter. The other funds with brand new LNC positions are Matthew Tewksbury’s Stevens Capital Management, David Costen Haley’s HBK Investments, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks similar to Lincoln National Corporation (NYSE:LNC). These stocks are Vulcan Materials Company (NYSE:VMC), Host Hotels and Resorts Inc (NYSE:HST), Concho Resources Inc. (NYSE:CXO), and Stericycle Inc (NASDAQ:SRCL). This group of stocks’ market values match LNC’s market value.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $837 million, close to the $845 million in LNC’s case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Host Hotels and Resorts Inc (NYSE:HST) is the least popular one with only 29 bullish hedge fund positions. Lincoln National Corporation (NYSE:LNC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VMC might be a better candidate to consider a long position.