If you were to ask many investors, hedge funds are assumed to be useless, old investment vehicles of a period lost to current times. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey focuses on the moguls of this club, about 525 funds. Analysts calculate that this group has its hands on most of all hedge funds’ total capital, and by watching their best stock picks, we’ve spotted a number of investment strategies that have historically outperformed Mr. Market. 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as crucial, positive insider trading activity is another way to look at the stock market universe. As the old adage goes: there are a variety of reasons for an insider to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if investors understand where to look (learn more here).
Furthermore, let’s analyze the recent info surrounding Torchmark Corporation (NYSE:TMK).
How have hedgies been trading Torchmark Corporation (NYSE:TMK)?
Heading into Q3, a total of 14 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
According to our 13F database, Warren Buffett’s Berkshire Hathaway had the largest position in Torchmark Corporation (NYSE:TMK), worth close to $275.9 million, comprising 0.3% of its total 13F portfolio. On Berkshire Hathaway’s heels is Winton Capital Management, managed by David Harding, which held a $43.1 million position; 0.5% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Richard S. Pzena’s Pzena Investment Management, Natixis Global Asset Management’s Harris Associates and Phill Gross and Robert Atchinson’s Adage Capital Management.
Since Torchmark Corporation (NYSE:TMK) has witnessed declining interest from the top-tier hedge fund industry, we can see that there is a sect of money managers that elected to cut their entire stakes last quarter. It’s worth mentioning that Jim Simons’s Renaissance Technologies dumped the biggest investment of the “upper crust” of funds we key on, worth close to $15.4 million in stock, and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund cut about $0.8 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Torchmark Corporation (NYSE:TMK)?
Bullish insider trading is best served when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, Torchmark Corporation (NYSE:TMK) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Torchmark Corporation (NYSE:TMK). These stocks are Protective Life Corp. (NYSE:PL), Lincoln National Corporation (NYSE:LNC), Aviva Plc (ADR) (NYSE:AV), Reinsurance Group of America Inc (NYSE:RGA), and Genworth Financial Inc (NYSE:GNW). This group of stocks are in the life insurance industry and their market caps match TMK’s market cap.