The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Loews Corporation (NYSE:L) and determine whether the smart money was really smart about this stock.
Loews Corporation (NYSE:L) investors should pay attention to an increase in support from the world's most elite money managers lately. Loews Corporation (NYSE:L) was in 28 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 30. There were 21 hedge funds in our database with L positions at the end of the first quarter. Our calculations also showed that L 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.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Lee Ainslie of Maverick Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now we're going to take a peek at the key hedge fund action surrounding Loews Corporation (NYSE:L).
How have hedgies been trading Loews Corporation (NYSE:L)?
At second quarter's end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards L over the last 20 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Loews Corporation (NYSE:L) was held by Diamond Hill Capital, which reported holding $64.3 million worth of stock at the end of September. It was followed by DPM Capital with a $28.7 million position. Other investors bullish on the company included Wallace Capital Management, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position DPM Capital allocated the biggest weight to Loews Corporation (NYSE:L), around 17.44% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, designating 2.14 percent of its 13F equity portfolio to L.
As one would reasonably expect, key hedge funds were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in Loews Corporation (NYSE:L). Citadel Investment Group had $9.2 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $2.1 million investment in the stock during the quarter. The following funds were also among the new L investors: Lee Ainslie's Maverick Capital, Greg Eisner's Engineers Gate Manager, and Benjamin A. Smith's Laurion Capital Management.
Let's check out hedge fund activity in other stocks similar to Loews Corporation (NYSE:L). We will take a look at DaVita Inc (NYSE:DVA), The AES Corporation (NYSE:AES), CNH Industrial NV (NYSE:CNHI), WPP Plc (NASDAQ:WPP), Live Nation Entertainment, Inc. (NYSE:LYV), Avery Dennison Corporation (NYSE:AVY), and Packaging Corporation Of America (NYSE:PKG). All of these 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 DVA,35,3678190,-8 AES,31,564378,0 CNHI,17,205909,0 WPP,9,34980,4 LYV,44,1194049,-2 AVY,29,175959,11 PKG,25,101486,2 Average,27.1,850707,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $851 million. That figure was $153 million in L's case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand WPP Plc (NASDAQ:WPP) is the least popular one with only 9 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 65.1. 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 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately L wasn't nearly as popular as these 10 stocks and hedge funds that were betting on L were disappointed as the stock returned -1.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.