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Hedge Funds Have Never Been This Bullish On 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 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Reinsurance Group of America Inc (NYSE:RGA).

Reinsurance Group of America Inc (NYSE:RGA) has experienced an increase in enthusiasm from smart money in recent months. Our calculations also showed that RGA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the key hedge fund action regarding Reinsurance Group of America Inc (NYSE:RGA).

How have hedgies been trading Reinsurance Group of America Inc (NYSE:RGA)?

Heading into the second quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RGA over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in Reinsurance Group of America Inc (NYSE:RGA) was held by AQR Capital Management, which reported holding $60.6 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $50.9 million position. Other investors bullish on the company included Polar Capital, Renaissance Technologies, and D E Shaw. In terms of the portfolio weights assigned to each position Polar Capital allocated the biggest weight to Reinsurance Group of America Inc (NYSE:RGA), around 0.4% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to RGA.

As industrywide interest jumped, key hedge funds have jumped into Reinsurance Group of America Inc (NYSE:RGA) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the largest position in Reinsurance Group of America Inc (NYSE:RGA). PEAK6 Capital Management had $3.4 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $2.9 million position during the quarter. The other funds with brand new RGA positions are Benjamin A. Smith’s Laurion Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Reinsurance Group of America Inc (NYSE:RGA) but similarly valued. We will take a look at Vereit Inc (NYSE:VER), Healthcare Trust Of America Inc (NYSE:HTA), Exelixis, Inc. (NASDAQ:EXEL), and Apartment Investment and Management Co. (NYSE:AIV). This group of stocks’ market caps resemble RGA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VER 18 314967 -10
HTA 16 106529 5
EXEL 30 935037 7
AIV 21 395202 -3
Average 21.25 437934 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $438 million. That figure was $276 million in RGA’s case. Exelixis, Inc. (NASDAQ:EXEL) is the most popular stock in this table. On the other hand Healthcare Trust Of America Inc (NYSE:HTA) is the least popular one with only 16 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. 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 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately RGA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RGA were disappointed as the stock returned 8.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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