Should you be dumping Genworth Financial Inc (NYSE:GNW)?
To many traders, hedge funds are assumed to be delayed, old investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading today, Insider Monkey focuses on the leaders of this group, about 525 funds. Analysts calculate that this group oversees most of all hedge funds’ total assets, and by tracking their best picks, we’ve unsheathed a number of investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Equally as key, optimistic insider trading sentiment is a second way to analyze the marketplace. Just as you’d expect, there are a variety of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this method if piggybackers understand where to look (learn more here).
Keeping this in mind, it’s important to analyze the recent info about Genworth Financial Inc (NYSE:GNW).
What does the smart money think about Genworth Financial Inc (NYSE:GNW)?
Heading into Q3, a total of 33 of the hedge funds we track held long positions in this stock, a change of -15% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially.
Out of the hedge funds we follow, Paulson & Co, managed by John Paulson, holds the most valuable position in Genworth Financial Inc (NYSE:GNW). Paulson & Co has a $102.7 million position in the stock, comprising 0.7% of its 13F portfolio. On Paulson & Co’s heels is Legg Mason Capital Management, managed by Bill Miller, which held a $101.6 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Jim Simons’s Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Charles Clough’s Clough Capital Partners.
Judging by the fact that Genworth Financial Inc (NYSE:GNW) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers who were dropping their full holdings in Q1. At the top of the heap, Edward Lampert’s ESL Investments sold off the biggest stake of the 450+ funds we watch, totaling an estimated $83.8 million in call options., and Israel Englander of Millennium Management was right behind this move, as the fund cut about $10.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 6 funds in Q1.
How have insiders been trading Genworth Financial Inc (NYSE:GNW)?
Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time frame, Genworth Financial Inc (NYSE:GNW) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Genworth Financial Inc (NYSE:GNW). These stocks are Lincoln National Corporation (NYSE:LNC), Protective Life Corp. (NYSE:PL), Aviva Plc (ADR) (NYSE:AV), Torchmark Corporation (NYSE:TMK), and Reinsurance Group of America Inc (NYSE:RGA). This group of stocks belong to the life insurance industry and their market caps are similar to GNW’s market cap.