In the eyes of most market participants, hedge funds are perceived as slow, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, we choose to focus on the upper echelon of this group, about 450 funds. It is estimated that this group oversees the lion’s share of the hedge fund industry’s total capital, and by watching their top picks, we have spotted a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as beneficial, bullish insider trading sentiment is another way to break down the world of equities. Obviously, there are many stimuli for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the useful potential of this method if “monkeys” know what to do (learn more here).
Now, let’s take a look at the latest action surrounding Sun Life Financial Inc. (USA) (NYSE:SLF).
What does the smart money think about Sun Life Financial Inc. (USA) (NYSE:SLF)?
In preparation for this quarter, a total of 9 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Sun Life Financial Inc. (USA) (NYSE:SLF), worth close to $4.6 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which held a $3.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Ken Gray and Steve Walsh’s Bryn Mawr Capital, Jim Simons’s Renaissance Technologies and John Thiessen’s Vertex One Asset Management.
Seeing as Sun Life Financial Inc. (USA) (NYSE:SLF) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there is a sect of funds that decided to sell off their entire stakes at the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest stake of the “upper crust” of funds we key on, totaling about $48.4 million in stock. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Sun Life Financial Inc. (USA) (NYSE:SLF)?
Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time frame, Sun Life Financial Inc. (USA) (NYSE:SLF) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Sun Life Financial Inc. (USA) (NYSE:SLF). These stocks are Lincoln National Corporation (NYSE:LNC), ING Groep N.V. (ADR) (NYSE:ING), Prudential Financial Inc (NYSE:PRU), Manulife Financial Corporation (USA) (NYSE:MFC), and AEGON N.V. (ADR) (NYSE:AEG). This group of stocks belong to the life insurance industry and their market caps resemble SLF’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Lincoln National Corporation (NYSE:LNC) | 27 | 0 | 7 |
| ING Groep N.V. (ADR) (NYSE:ING) | 8 | 0 | 0 |
| Prudential Financial Inc (NYSE:PRU) | 34 | 1 | 7 |
| Manulife Financial Corporation (USA) (NYSE:MFC) | 12 | 0 | 0 |
| AEGON N.V. (ADR) (NYSE:AEG) | 8 | 0 | 0 |
With the results demonstrated by the aforementioned time-tested strategies, everyday investors must always pay attention to hedge fund and insider trading activity, and Sun Life Financial Inc. (USA) (NYSE:SLF) is no exception.
