In this article we will check out the progression of hedge fund sentiment towards Loews Corporation (NYSE:L) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Loews Corporation (NYSE:L) ready to rally soon? Prominent investors were turning bullish. The number of long hedge fund positions went up by 2 lately. Loews Corporation (NYSE:L) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. Our calculations also showed that L isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with L holdings at the end of December.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Do Hedge Funds Think L Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in L a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Loews Corporation (NYSE:L) was held by Diamond Hill Capital, which reported holding $87.8 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $28 million position. Other investors bullish on the company included Wallace Capital Management, Wallace Capital Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Wallace Capital Management allocated the biggest weight to Loews Corporation (NYSE:L), around 2.38% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, setting aside 2.38 percent of its 13F equity portfolio to L.
As one would reasonably expect, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in Loews Corporation (NYSE:L). Balyasny Asset Management had $12.6 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $1.2 million investment in the stock during the quarter. The other funds with brand new L positions are Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), Phill Gross and Robert Atchinson’s Adage Capital Management, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s check out hedge fund activity in other stocks similar to Loews Corporation (NYSE:L). These stocks are NICE Ltd (NASDAQ:NICE), Molina Healthcare, Inc. (NYSE:MOH), The Scotts Miracle-Gro Company (NYSE:SMG), Dynatrace, Inc. (NYSE:DT), Leidos Holdings Inc (NYSE:LDOS), James Hardie Industries plc (NYSE:JHX), and NovoCure Limited (NASDAQ:NVCR). This group of stocks’ market values are similar to L’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $702 million. That figure was $200 million in L’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. Loews Corporation (NYSE:L) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for L is 45.7. 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 negative signal and 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately L wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); L investors were disappointed as the stock returned 5.5% since the end of March (through 7/16) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.