The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded China Life Insurance Company Ltd. (NYSE:LFC) based on those filings.
China Life Insurance Company Ltd. (NYSE:LFC) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 8 hedge funds' portfolios at the end of September. At the end of this article we will also compare LFC to other stocks including Dominion Energy, Inc. (NYSE:D), Canadian National Railway Company (NYSE:CNI), and The Southern Company (NYSE:SO) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's go over the fresh hedge fund action regarding China Life Insurance Company Ltd. (NYSE:LFC).
How have hedgies been trading China Life Insurance Company Ltd. (NYSE:LFC)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in LFC a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of China Life Insurance Company Ltd. (NYSE:LFC), with a stake worth $16.3 million reported as of the end of September. Trailing Renaissance Technologies was LMR Partners, which amassed a stake valued at $11.9 million. Arrowstreet Capital, Citadel Investment Group, and D E Shaw 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 LMR Partners allocated the biggest weight to China Life Insurance Company Ltd. (NYSE:LFC), around 0.59% of its 13F portfolio. Stevens Capital Management is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to LFC.
Seeing as China Life Insurance Company Ltd. (NYSE:LFC) has witnessed a decline in interest from hedge fund managers, it's safe to say that there were a few hedge funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Simon Sadler's Segantii Capital dumped the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $3.4 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also cut its stock, about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as China Life Insurance Company Ltd. (NYSE:LFC) but similarly valued. We will take a look at Dominion Energy, Inc. (NYSE:D), Canadian National Railway Company (NYSE:CNI), The Southern Company (NYSE:SO), and Northrop Grumman Corporation (NYSE:NOC). All of these stocks' market caps are similar to LFC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position D,42,766846,3 CNI,27,2084810,-1 SO,31,1190703,9 NOC,43,843083,6 Average,35.75,1221361,4.25 [/table]
As you can see these stocks had an average of 35.75 hedge funds with bullish positions and the average amount invested in these stocks was $1221 million. That figure was $35 million in LFC's case. Northrop Grumman Corporation (NYSE:NOC) is the most popular stock in this table. On the other hand Canadian National Railway Company (NYSE:CNI) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks China Life Insurance Company Ltd. (NYSE:LFC) is even less popular than CNI. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on LFC, though not to the same extent, as the stock returned 9.4% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
