Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Loews Corporation (NYSE:L) based on that data.
Loews Corporation (NYSE:L) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 30. L investors should be aware of a decrease in hedge fund sentiment in recent months. There were 28 hedge funds in our database with L holdings at the end of June. Our calculations also showed that L isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind let’s view the fresh hedge fund action surrounding Loews Corporation (NYSE:L).
Do Hedge Funds Think L Is A Good Stock To Buy Now?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the second quarter of 2020. By comparison, 30 hedge funds held shares or bullish call options in L a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the biggest position in Loews Corporation (NYSE:L), worth close to $64 million, corresponding to 0.4% of its total 13F portfolio. The second most bullish fund manager is DPM Capital, led by Pedro Escudero, holding a $29.1 million position; 17.5% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish comprise Scott Wallace’s Wallace Capital Management, Israel Englander’s Millennium Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position DPM Capital allocated the biggest weight to Loews Corporation (NYSE:L), around 17.53% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, earmarking 1.95 percent of its 13F equity portfolio to L.
Judging by the fact that Loews Corporation (NYSE:L) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies who sold off their positions entirely in the third quarter. It’s worth mentioning that Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors said goodbye to the largest position of all the hedgies followed by Insider Monkey, totaling an estimated $1.5 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dropped about $1.2 million worth. These moves are important to note, as total hedge fund interest dropped by 10 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Loews Corporation (NYSE:L) but similarly valued. These stocks are DENTSPLY SIRONA Inc. (NASDAQ:XRAY), Bio-Techne Corporation (NASDAQ:TECH), Albemarle Corporation (NYSE:ALB), Ally Financial Inc (NYSE:ALLY), Nuance Communications Inc. (NASDAQ:NUAN), Shaw Communications Inc (NYSE:SJR), and Huntington Bancshares Incorporated (NASDAQ:HBAN). This group of stocks’ market values match L’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 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $933 million. That figure was $136 million in L’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Shaw Communications Inc (NYSE:SJR) is the least popular one with only 13 bullish hedge fund positions. Loews Corporation (NYSE:L) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for L is 19.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on L as the stock returned 23.5% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.