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China Life Insurance Company Ltd. (LFC) Seeing Drastic Change In Hedge Fund Sentiment

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards China Life Insurance Company Ltd. (ADR) (NYSE:LFC) to find out whether it was one of their high conviction long-term ideas.

China Life Insurance Company Ltd. (ADR) (NYSE:LFC) has seen a decrease in activity from the world’s largest hedge funds recently.LFC was in 9 hedge funds’ portfolio at the end of the third quarter of 2015. There were 15 hedge funds in our database with LFC positions at the end of the previous quarter. This is a drastic decline in hedge fund optimism. Let’s take a detailed look at the recent action regarding China Life Insurance Company Ltd. (ADR) (NYSE:LFC).

What have hedge funds been doing with China Life Insurance Company Ltd. (ADR) (NYSE:LFC)?

Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey were long in this stock, a change of -40% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially.

According to hedge fund intelligence website Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital had the number one position in China Life Insurance Company Ltd. (ADR) (NYSE:LFC), worth close to $57.8 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is BlueCrest Capital Mgmt., led by Michael Platt and William Reeves, holding a $24.9 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish contain quant funds Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Jim Simons’s Renaissance Technologies.

Due to the fact that China Life Insurance Company Ltd. (ADR) (NYSE:LFC) has faced declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of money managers that decided to sell off their entire stakes in third quarter. It’s worth mentioning that Simon Sadler’s Segantii Capital sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $2.3 million in stock. David Costen Haley’s fund, HBK Investments, also sold off its stock, about $0.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds in third quarter.

Let’s also go over hedge fund activity in other stocks similar to China Life Insurance Company Ltd. (ADR) (NYSE:LFC). We will take a look at Medtronic, Inc. (NYSE:MDT), McDonald’s Corporation (NYSE:MCD), Eli Lilly & Co. (NYSE:LLY), and Walgreens Boots Alliance Inc (NASDAQ:WBA). All of these stocks’ market caps are similar to LFC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MDT 58 2051269 -5
MCD 75 6105687 -6
LLY 47 2290575 4
WBA 91 9515034 10

As can be clearly seen from this table China Life Insurance isn’t popular at all among hedge funds and it is losing the limited support it has been receiving in recent months. We believe there are better stocks for investors to consider for investing.

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