The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Lincoln National Corporation (NYSE:LNC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Lincoln National Corporation (NYSE:LNC) the right investment to pursue these days? Money managers were taking a bullish view. The number of bullish hedge fund positions increased by 8 lately. Lincoln National Corporation (NYSE:LNC) was in 34 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 40. Our calculations also showed that LNC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the key hedge fund action regarding Lincoln National Corporation (NYSE:LNC).
Hedge fund activity in Lincoln National Corporation (NYSE:LNC)
At the end of the second quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in LNC over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Lincoln National Corporation (NYSE:LNC) was held by Lyrical Asset Management, which reported holding $176.2 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $103.2 million position. Other investors bullish on the company included Citadel Investment Group, East Side Capital (RR Partners), and GLG Partners. 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 7.29% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, designating 3.47 percent of its 13F equity portfolio to LNC.
Consequently, key hedge funds were leading the bulls’ herd. Chiron Investment Management, managed by Ryan Caldwell, assembled the most outsized position in Lincoln National Corporation (NYSE:LNC). Chiron Investment Management had $5.5 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $4.6 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Matthew Hulsizer’s PEAK6 Capital Management, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Lincoln National Corporation (NYSE:LNC). These stocks are Bill.com Holdings, Inc. (NYSE:BILL), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), Bright Horizons Family Solutions Inc (NYSE:BFAM), Huntington Ingalls Industries Inc (NYSE:HII), Universal Display Corporation (NASDAQ:OLED), XPO Logistics Inc (NYSE:XPO), and News Corp (NASDAQ:NWS). This group of stocks’ market caps are closest to LNC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BILL | 52 | 1196788 | 30 |
| KNX | 39 | 466487 | 7 |
| BFAM | 30 | 217350 | 3 |
| HII | 30 | 272167 | 9 |
| OLED | 25 | 216895 | 1 |
| XPO | 40 | 2294370 | 4 |
| NWS | 16 | 32230 | 3 |
| Average | 33.1 | 670898 | 8.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.1 hedge funds with bullish positions and the average amount invested in these stocks was $671 million. That figure was $494 million in LNC’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 16 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 60.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately LNC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LNC were disappointed as the stock returned -0.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
