Protective Life Corp. (PL): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

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Protective Life Corp. (NYSE:PL) has seen a decrease in enthusiasm from smart money lately.

In the eyes of most investors, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at present, we at Insider Monkey look at the upper echelon of this group, around 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by watching their top stock picks, we have brought to light a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as important, bullish insider trading sentiment is a second way to break down the world of equities. There are a variety of stimuli for an insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this method if shareholders know where to look (learn more here).

With all of this in mind, let’s take a peek at the latest action encompassing Protective Life Corp. (NYSE:PL).

How have hedgies been trading Protective Life Corp. (NYSE:PL)?

In preparation for this year, a total of 13 of the hedge funds we track were bullish in this stock, a change of -7% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Ken Fisher’s Fisher Asset Management had the biggest position in Protective Life Corp. (NYSE:PL), worth close to $51.2 million, comprising 0.1% of its total 13F portfolio. Coming in second is Dreman Value Management, managed by David Dreman, which held a $32.5 million position; 0.9% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Cliff Asness’s AQR Capital Management, Richard S. Pzena’s Pzena Investment Management and Ken Griffin’s Citadel Investment Group.

Since Protective Life Corp. (NYSE:PL) has faced falling interest from hedge fund managers, it’s easy to see that there is a sect of fund managers that decided to sell off their full holdings heading into 2013. Intriguingly, D. E. Shaw’s D E Shaw dumped the biggest position of the “upper crust” of funds we key on, worth close to $0.5 million in call options. Paul Tudor Jones’s fund, Tudor Investment Corp, also said goodbye to its stock, about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into 2013.

What have insiders been doing with Protective Life Corp. (NYSE:PL)?

Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time period, Protective Life Corp. (NYSE:PL) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Protective Life Corp. (NYSE:PL). These stocks are Genworth Financial Inc (NYSE:GNW), Symetra Financial Corporation (NYSE:SYA), Reinsurance Group of America Inc (NYSE:RGA), Primerica, Inc. (NYSE:PRI), and Aviva Plc (ADR) (NYSE:AV). This group of stocks are in the life insurance industry and their market caps match PL’s market cap.

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