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Here’s What Hedge Funds Think About AFLAC Incorporated (AFL)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is AFLAC Incorporated (NYSE:AFL), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is AFLAC Incorporated (NYSE:AFL) the right pick for your portfolio? Prominent investors are taking an optimistic view. The number of bullish hedge fund positions improved by 3 recently. Our calculations also showed that afl isn’t among the 30 most popular stocks among hedge funds. AFL was in 30 hedge funds’ portfolios at the end of the first quarter of 2019. There were 27 hedge funds in our database with AFL positions at the end of the previous quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Dmitry Balyasny

Let’s review the latest hedge fund action surrounding AFLAC Incorporated (NYSE:AFL).

What does the smart money think about AFLAC Incorporated (NYSE:AFL)?

At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in AFL over the last 15 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

No of Hedge Funds with AFL Positions

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in AFLAC Incorporated (NYSE:AFL). AQR Capital Management has a $434.9 million position in the stock, comprising 0.5% of its 13F portfolio. On AQR Capital Management’s heels is Ariel Investments, led by John W. Rogers, holding a $81.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Dmitry Balyasny’s Balyasny Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Consequently, specific money managers have been driving this bullishness. HBK Investments, managed by David Costen Haley, assembled the most outsized position in AFLAC Incorporated (NYSE:AFL). HBK Investments had $4.3 million invested in the company at the end of the quarter. John Brandmeyer’s Cognios Capital also initiated a $2.3 million position during the quarter. The following funds were also among the new AFL investors: Mario Gabelli’s GAMCO Investors, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AFLAC Incorporated (NYSE:AFL) but similarly valued. These stocks are American International Group Inc (NYSE:AIG), Koninklijke Philips NV (NYSE:PHG), ICICI Bank Limited (NYSE:IBN), and Fidelity National Information Services Inc. (NYSE:FIS). This group of stocks’ market values are closest to AFL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AIG 37 1792752 -2
PHG 11 158586 -3
IBN 26 744012 0
FIS 55 3479314 18
Average 32.25 1543666 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $1544 million. That figure was $738 million in AFL’s case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. AFLAC Incorporated (NYSE:AFL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on AFL as the stock returned 3.7% during the same time frame and outperformed the market by an even larger margin.

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

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