Do Hedge Funds Love Torchmark Corporation (TMK)?

Is Torchmark Corporation (NYSE:TMK) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Torchmark Corporation (NYSE:TMK) was in 24 hedge funds’ portfolios at the end of September. TMK has experienced an increase in support from the world’s most elite money managers lately. There were 14 hedge funds in our database with TMK positions at the end of the previous quarter. At the end of this article we will also compare TMK to other stocks including CDW Corp (NASDAQ:CDW), Brixmor Property Group Inc (NYSE:BRX), and Signature Bank (NASDAQ:SBNY) to get a better sense of its popularity.

Keeping this in mind, let’s analyze the latest action encompassing Torchmark Corporation (NYSE:TMK).

How have hedgies been trading Torchmark Corporation (NYSE:TMK)?

Heading into Q4, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 71% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Warren Buffett’s Berkshire Hathaway has the most valuable position in Torchmark Corporation (NYSE:TMK), worth close to $358.4 million, amounting to 0.3% of its total 13F portfolio. The second most bullish fund manager is Richard S. Pzena of Pzena Investment Management, with an $51.2 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish comprise Ken Griffin’s Citadel Investment Group, Cliff Asness’ AQR Capital Management and Israel Englander’s Millennium Management.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Torchmark Corporation (NYSE:TMK). Citadel Investment Group had $44.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made an $16.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Louis Bacon’s Moore Global Investments, and Daniel Lascano’s Lomas Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Torchmark Corporation (NYSE:TMK) but similarly valued. These stocks are CDW Corp (NASDAQ:CDW), Brixmor Property Group Inc (NYSE:BRX), Signature Bank (NASDAQ:SBNY), and Vereit Inc (NYSE:VER). This group of stocks’ market valuations are similar to TMK’s market valuation.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $627 million. That figure was $548 million in TMK’s case. Vereit Inc (NYSE:VER) is the most popular stock in this table. On the other hand Brixmor Property Group Inc (NYSE:BRX) is the least popular one with only 9 bullish hedge fund positions. Torchmark Corporation (NYSE:TMK) 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 VER might be a better candidate to consider a long position.