Keeping this in mind, let’s analyze whether Reinsurance Group of America Inc (NYSE:RGA) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Is Reinsurance Group of America Inc (NYSE:RGA) a buy here? The smart money was taking an optimistic view. The number of long hedge fund positions increased by 3 lately. Reinsurance Group of America Inc (NYSE:RGA) was in 33 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RGA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 biggest insurance companies to identify fast growing companies in various industries. 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 website to get excerpts of these letters in your inbox. Now let’s take a glance at the latest hedge fund action encompassing Reinsurance Group of America Inc (NYSE:RGA).
How are hedge funds trading Reinsurance Group of America Inc (NYSE:RGA)?
At Q2’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in RGA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Diamond Hill Capital was the largest shareholder of Reinsurance Group of America Inc (NYSE:RGA), with a stake worth $43.7 million reported as of the end of June. Trailing Diamond Hill Capital was Renaissance Technologies, which amassed a stake valued at $37 million. Polar Capital, Millennium Management, and AQR Capital 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 Pinz Capital allocated the biggest weight to Reinsurance Group of America Inc (NYSE:RGA), around 0.45% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, setting aside 0.43 percent of its 13F equity portfolio to RGA.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Moore Global Investments, managed by Louis Bacon, initiated the biggest position in Reinsurance Group of America Inc (NYSE:RGA). Moore Global Investments had $10 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also initiated a $3.1 million position during the quarter. The other funds with new positions in the stock are Parvinder Thiara’s Athanor Capital, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s now take a look at hedge fund activity in other stocks similar to Reinsurance Group of America Inc (NYSE:RGA). We will take a look at Douglas Emmett, Inc. (NYSE:DEI), Dunkin Brands Group Inc (NASDAQ:DNKN), First American Financial Corp (NYSE:FAF), Jones Lang LaSalle Inc (NYSE:JLL), Woori Financial Group Inc. (NYSE:WF), Corelogic Inc (NYSE:CLGX), and Columbia Sportswear Company (NASDAQ:COLM). This group of stocks’ market values match RGA’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $486 million. That figure was $241 million in RGA’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 5 bullish hedge fund positions. Reinsurance Group of America Inc (NYSE:RGA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGA is 73.9. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and still beat the market by 20.1 percentage points. Hedge funds were also right about betting on RGA as the stock returned 29.7% since the end of Q2 (through 10/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.