Should I Avoid Lincoln National Corporation (LNC)?

In this article we will check out the progression of hedge fund sentiment towards Lincoln National Corporation (NYSE:LNC) 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.

Lincoln National Corporation (NYSE:LNC) has experienced a decrease in enthusiasm from smart money recently. Lincoln National Corporation (NYSE:LNC) was in 30 hedge funds’ portfolios at the end of June. The all time high for this statistic is 40. Our calculations also showed that LNC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the new hedge fund action surrounding Lincoln National Corporation (NYSE:LNC).

Do Hedge Funds Think LNC Is A Good Stock To Buy Now?

At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LNC over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Lyrical Asset Management was the largest shareholder of Lincoln National Corporation (NYSE:LNC), with a stake worth $287.5 million reported as of the end of June. Trailing Lyrical Asset Management was Arrowstreet Capital, which amassed a stake valued at $171 million. Two Sigma Advisors, Schonfeld Strategic Advisors, and Impax Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lyrical Asset Management allocated the biggest weight to Lincoln National Corporation (NYSE:LNC), around 3.48% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, setting aside 1.17 percent of its 13F equity portfolio to LNC.

Because Lincoln National Corporation (NYSE:LNC) has faced falling interest from the smart money, we can see that there is a sect of funds who sold off their entire stakes in the second quarter. It’s worth mentioning that Steven Richman’s East Side Capital (RR Partners) cut the largest position of the “upper crust” of funds watched by Insider Monkey, worth close to $62.7 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $21.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 6 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lincoln National Corporation (NYSE:LNC) but similarly valued. These stocks are Penn National Gaming, Inc (NASDAQ:PENN), QuantumScape Corporation (NYSE:QS), Dropbox, Inc. (NASDAQ:DBX), Medical Properties Trust, Inc. (NYSE:MPW), Lamb Weston Holdings, Inc. (NYSE:LW), Chegg Inc (NYSE:CHGG), and Trex Company, Inc. (NYSE:TREX). All of these stocks’ market caps are similar to LNC’s market cap.

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As you can see these stocks had an average of 31.9 hedge funds with bullish positions and the average amount invested in these stocks was $589 million. That figure was $679 million in LNC’s case. Penn National Gaming, Inc (NASDAQ:PENN) is the most popular stock in this table. On the other hand Medical Properties Trust, Inc. (NYSE:MPW) is the least popular one with only 19 bullish hedge fund positions. Lincoln National Corporation (NYSE:LNC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LNC is 47.7. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on LNC as the stock returned 16.6% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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