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Hedge Funds Can’t Stop Buying Reinsurance Group of America Inc (RGA)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Reinsurance Group of America Inc (NYSE:RGA) and determine whether the smart money was really smart about this stock.

Is Reinsurance Group of America Inc (NYSE:RGA) a buy right now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund positions advanced by 3 lately. Reinsurance Group of America Inc (NYSE:RGA) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RGA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most market participants, hedge funds are assumed to be unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts hone in on the upper echelon of this group, about 850 funds. Most estimates calculate that this group of people oversee the majority of the smart money’s total capital, and by monitoring their matchless equity investments, Insider Monkey has discovered many investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

MOORE GLOBAL INVESTMENTS

Louis Bacon Moore of Moore Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s go over the recent hedge fund action surrounding Reinsurance Group of America Inc (NYSE:RGA).

What have hedge funds been doing with Reinsurance Group of America Inc (NYSE:RGA)?

At the end of June, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the first quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in RGA a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Diamond Hill Capital, managed by Ric Dillon, holds the biggest position in Reinsurance Group of America Inc (NYSE:RGA). Diamond Hill Capital has a $43.7 million position in the stock, comprising 0.3% of its 13F portfolio. On Diamond Hill Capital’s heels is Renaissance Technologies, holding a $37 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Brian Ashford-Russell and Tim Woolley’s Polar Capital, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Reinsurance Group of America Inc (NYSE:RGA), around 0.45% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.43 percent of its 13F equity portfolio to RGA.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, initiated the largest position in Reinsurance Group of America Inc (NYSE:RGA). Moore Global Investments had $10 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also initiated a $3.1 million position during the quarter. The other funds with new positions in the stock are Parvinder Thiara’s Athanor Capital, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Reinsurance Group of America Inc (NYSE:RGA) but similarly valued. These stocks are Douglas Emmett, Inc. (NYSE:DEI), Dunkin Brands Group Inc (NASDAQ:DNKN), First American Financial Corp (NYSE:FAF), Jones Lang LaSalle Inc (NYSE:JLL), Woori Financial Group Inc. (NYSE:WF), Corelogic Inc (NYSE:CLGX), and Columbia Sportswear Company (NASDAQ:COLM). All of these stocks’ market caps resemble RGA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DEI 27 699337 5
DNKN 35 416764 1
FAF 44 685903 4
JLL 23 676141 -3
WF 5 3508 2
CLGX 35 887468 4
COLM 17 36331 2
Average 26.6 486493 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $486 million. That figure was $241 million in RGA’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 5 bullish hedge fund positions. Reinsurance Group of America Inc (NYSE:RGA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGA is 73.9. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on RGA, though not to the same extent, as the stock returned 17.7% since the end of June and outperformed the market as well.

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