Torchmark Corporation (NYSE:TMK) has seen a decrease in hedge fund sentiment in recent months.
If you’d ask most stock holders, hedge funds are seen as worthless, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the leaders of this group, close to 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total asset base, and by keeping an eye on their top stock picks, we have determined a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as key, optimistic insider trading activity is a second way to break down the financial markets. Obviously, there are plenty of stimuli for an insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this tactic if “monkeys” understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the latest action encompassing Torchmark Corporation (NYSE:TMK).
Hedge fund activity in Torchmark Corporation (NYSE:TMK)
Heading into Q2, a total of 14 of the hedge funds we track were bullish in this stock, a change of -33% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Berkshire Hathaway, managed by Warren Buffett, holds the biggest position in Torchmark Corporation (NYSE:TMK). Berkshire Hathaway has a $253.3 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Pzena Investment Management, managed by Richard S. Pzena, which held a $27.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include David Harding’s Winton Capital Management, Jim Simons’s Renaissance Technologies and Phill Gross and Robert Atchinson’s Adage Capital Management.
Due to the fact that Torchmark Corporation (NYSE:TMK) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of funds that elected to cut their positions entirely in Q1. It’s worth mentioning that Robert B. Gillam’s McKinley Capital Management said goodbye to the biggest investment of all the hedgies we key on, worth close to $5.2 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund dumped about $3.5 million worth. These moves are interesting, as total hedge fund interest dropped by 7 funds in Q1.
How have insiders been trading Torchmark Corporation (NYSE:TMK)?
Bullish insider trading is best served when the company in focus has experienced transactions within the past six months. Over the last six-month time frame, Torchmark Corporation (NYSE:TMK) has experienced zero unique insiders purchasing, and 26 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Torchmark Corporation (NYSE:TMK). These stocks are Protective Life Corp. (NYSE:PL), Lincoln National Corporation (NYSE:LNC), Reinsurance Group of America Inc (NYSE:RGA), and Genworth Financial Inc (NYSE:GNW). All of these stocks are in the life insurance industry and their market caps are similar to TMK’s market cap.