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Hedge Funds Are Selling Loews Corporation (L)

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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Loews Corporation (NYSE:L) to find out whether there were any major changes in hedge funds' views.

Loews Corporation (NYSE:L) investors should be aware of a decrease in support from the world's most elite money managers in recent months. Loews Corporation (NYSE:L) was in 27 hedge funds' portfolios at the end of September. The all time high for this statistic is 30. 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).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to review the fresh hedge fund action encompassing Loews Corporation (NYSE:L).

David Harding
David Harding

David Harding of Winton Capital Management

Do Hedge Funds Think L Is A Good Stock To Buy Now?

At Q3's end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards L over the last 25 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Loews Corporation (NYSE:L). Arrowstreet Capital has a $55.7 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $23.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions comprise Scott Wallace's Wallace Capital Management, D. E. Shaw's D E Shaw and Renaissance Technologies. In terms of the portfolio weights assigned to each position Wallace Capital Management allocated the biggest weight to Loews Corporation (NYSE:L), around 2.57% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, designating 0.72 percent of its 13F equity portfolio to L.

Since Loews Corporation (NYSE:L) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of money managers that elected to cut their positions entirely heading into Q4. Interestingly, Matthew Stadelman's Diamond Hill Capital said goodbye to the biggest investment of the 750 funds followed by Insider Monkey, totaling close to $78.3 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund dropped about $1.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q4.

Let's check out hedge fund activity in other stocks similar to Loews Corporation (NYSE:L). We will take a look at Solaredge Technologies Inc (NASDAQ:SEDG), Nordson Corporation (NASDAQ:NDSN), W.P. Carey Inc. (NYSE:WPC), Lightspeed Commerce Inc. (NYSE:LSPD), Masco Corporation (NYSE:MAS), News Corp (NASDAQ:NWS), and Lumen Technologies, Inc. (NYSE:LUMN). This group of stocks' market caps are closest to L's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEDG,33,594467,-4 NDSN,29,310857,-5 WPC,24,142763,-5 LSPD,26,631903,-3 MAS,29,528895,-6 NWS,13,130888,-6 LUMN,25,941373,-8 Average,25.6,468735,-5.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $469 million. That figure was $175 million in L's case. Solaredge Technologies Inc (NASDAQ:SEDG) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 13 bullish hedge fund positions. Loews Corporation (NYSE:L) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for L is 66. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately L wasn't nearly as popular as these 5 stocks and hedge funds that were betting on L were disappointed as the stock returned 5.1% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.