Hedge Funds Are Souring On Lincoln National Corporation (LNC)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of September 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Lincoln National Corporation (NYSE:LNC).

Is Lincoln National Corporation (NYSE:LNC) a marvelous investment now? The best stock pickers were in a bearish mood. The number of long hedge fund positions were trimmed by 1 in recent months. Lincoln National Corporation (NYSE:LNC) was in 29 hedge funds’ portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that LNC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a peek at the fresh hedge fund action surrounding Lincoln National Corporation (NYSE:LNC).

Do Hedge Funds Think LNC Is A Good Stock To Buy Now?

At third quarter’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the second quarter of 2021. By comparison, 30 hedge funds held shares or bullish call options in LNC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Lyrical Asset Management, managed by Andrew Wellington and Jeff Keswin, holds the number one position in Lincoln National Corporation (NYSE:LNC). Lyrical Asset Management has a $304.7 million position in the stock, comprising 3.9% of its 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $179.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Other peers with similar optimism comprise Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Lyrical Asset Management allocated the biggest weight to Lincoln National Corporation (NYSE:LNC), around 3.91% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, earmarking 1.08 percent of its 13F equity portfolio to LNC.

Since Lincoln National Corporation (NYSE:LNC) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies that slashed their entire stakes last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dumped the biggest investment of the 750 funds monitored by Insider Monkey, valued at an estimated $20.2 million in stock, and Stuart J. Zimmer’s Zimmer Partners was right behind this move, as the fund dumped about $5.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Lincoln National Corporation (NYSE:LNC). These stocks are SoFi Technologies Inc. (NASDAQ:SOFI), Discovery Inc. (NASDAQ:DISCA), Whirlpool Corporation (NYSE:WHR), Santander Consumer USA Holdings Inc (NYSE:SC), Aluminum Corp. of China Limited (NYSE:ACH), Kimco Realty Corp (NYSE:KIM), and Floor & Decor Holdings, Inc. (NYSE:FND). This group of stocks’ market valuations are closest to LNC’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $692 million. That figure was $735 million in LNC’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 7 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 57.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately LNC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LNC were disappointed as the stock returned -3% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.