Hedge funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Torchmark Corporation (NYSE:TMK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
At the end of September, 19 funds tracked by Insider Monkey held long positions in Torchmark Corporation. The company saw a decrease in activity from the world’s largest hedge funds in the third quarter, since there had been 20 funds holding shares at the end of June. At the end of this article we will also compare TMK to other stocks including National Retail Properties, Inc. (NYSE:NNN), Msci Inc (NYSE:MSCI), and Ralph Lauren Corp (NYSE:RL) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s review the recent action surrounding Torchmark Corporation (NYSE:TMK).
Hedge fund activity in Torchmark Corporation (NYSE:TMK)
A total of 19 funds tracked by Insider Monkey were bullish on Torchmark Corporation (NYSE:TMK), which represents a decline of 5% from the end of the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in TMK over the last five quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Berkshire Hathaway, led by Warren Buffett, holds the biggest position in Torchmark Corporation (NYSE:TMK). Berkshire Hathaway has a $405.9 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, which holds a $61.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism contain Cliff Asness’s AQR Capital Management, Richard S. Pzena’s Pzena Investment Management and Dmitry Balyasny’s Balyasny Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Torchmark Corporation (NYSE:TMK) has weathered a decline in interest from hedge fund managers, it’s safe to say that there exists a select few hedgies who sold off their positions entirely heading into Q4. Interestingly, David Harding’s Winton Capital Management dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $25.4 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund sold off about $4.4 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Torchmark Corporation (NYSE:TMK). These stocks are National Retail Properties, Inc. (NYSE:NNN), Msci Inc (NYSE:MSCI), Ralph Lauren Corp (NYSE:RL), and Sabre Corp (NASDAQ:SABR). All of these stocks’ market caps resemble TMK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NNN | 20 | 103292 | 1 |
| MSCI | 24 | 349907 | 1 |
| RL | 25 | 574190 | -7 |
| SABR | 29 | 1947191 | -7 |
As you can see these stocks had an average of 25 funds with bullish positions and the average amount invested in these stocks was $744 million. That figure was $614 million in TMK’s case. Sabre Corp (NASDAQ:SABR) is the most popular stock in this table. On the other hand National Retail Properties, Inc. (NYSE:NNN) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Torchmark Corporation (NYSE:TMK) is even less popular than National Retail Properties, Inc. (NYSE:NNN). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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