Do Hedge Funds Love Reinsurance Group of America Inc (RGA)?
A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Reinsurance Group of America Inc (NYSE:RGA).
Is Reinsurance Group of America Inc (NYSE:RGA) a buy right now? The best stock pickers were buying. The number of bullish hedge fund positions moved up by 8 in recent months. Reinsurance Group of America Inc (NYSE:RGA) was in 27 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that RGA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with RGA positions at the end of the fourth quarter.
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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Richard S. Pzena of Pzena Investment Management
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Do Hedge Funds Think RGA Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 42% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RGA over the last 23 quarters. 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, Brian Ashford-Russell and Tim Woolley's Polar Capital has the biggest position in Reinsurance Group of America Inc (NYSE:RGA), worth close to $72.5 million, amounting to 0.4% of its total 13F portfolio. The second largest stake is held by Diamond Hill Capital, led by Matthew Stadelman, holding a $63.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Richard S. Pzena's Pzena Investment Management, Peter Seuss's Prana Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Prana Capital Management allocated the biggest weight to Reinsurance Group of America Inc (NYSE:RGA), around 2.52% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, dishing out 0.84 percent of its 13F equity portfolio to RGA.
As aggregate interest increased, key hedge funds have been driving this bullishness. Prana Capital Management, managed by Peter Seuss, created the biggest position in Reinsurance Group of America Inc (NYSE:RGA). Prana Capital Management had $30.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $15.7 million position during the quarter. The other funds with brand new RGA positions are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Dmitry Balyasny's Balyasny Asset Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's go over hedge fund activity in other stocks similar to Reinsurance Group of America Inc (NYSE:RGA). These stocks are UGI Corp (NYSE:UGI), Vistra Corp. (NYSE:VST), Guidewire Software Inc (NYSE:GWRE), Omega Healthcare Investors Inc (NYSE:OHI), The New York Times Company (NYSE:NYT), Ciena Corporation (NASDAQ:CIEN), and US Foods Holding Corp. (NYSE:USFD). All of these stocks' market caps are similar to RGA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UGI,19,189152,-6 VST,46,1254154,7 GWRE,33,1534269,-2 OHI,25,190542,10 NYT,48,2399824,-2 CIEN,27,327611,3 USFD,40,1489049,-4 Average,34,1054943,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1055 million. That figure was $355 million in RGA's case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand UGI Corp (NYSE:UGI) is the least popular one with only 19 bullish hedge fund positions. Reinsurance Group of America Inc (NYSE:RGA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RGA is 48.3. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately RGA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RGA investors were disappointed as the stock returned -10% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
