Hedge Funds Are Betting On Lorillard Inc. (LO)
Lorillard Inc. (NYSE:LO) investors: listen up.
In the 21st century investor’s toolkit, there are dozens of metrics market participants can use to analyze the equity markets. A pair of the most useful are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can beat the market by a healthy amount (see just how much).
Equally as key, positive insider trading activity is a second way to analyze the investments you're interested in. As the old adage goes: there are lots of incentives for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this strategy if "monkeys" understand where to look (learn more here).
Now that that's out of the way, let's analyze the latest info surrounding Lorillard Inc. (NYSE:LO).
Hedge fund activity in Lorillard Inc. (NYSE:LO)
At the end of the second quarter, a total of 26 of the hedge funds we track were long in this stock, a change of 8% from the first quarter. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably.
Out of the hedge funds we follow, First Eagle Investment Management, managed by Matt McLennan, holds the most valuable position in Lorillard Inc. (NYSE:LO). First Eagle Investment Management has a $507.8 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $162.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and David Harding's Winton Capital Management.
As aggregate interest spiked, particular hedge funds were breaking ground themselves. First Eagle Investment Management, managed by Matt McLennan, created the most valuable position in Lorillard Inc. (NYSE:LO). First Eagle Investment Management had 507.8 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also made a $162.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Eric Edidin and Josh Lobel's Archer Capital Management, and David Harding's Winton Capital Management.
Insider trading activity in Lorillard Inc. (NYSE:LO)
Insider buying made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time frame, Lorillard Inc. (NYSE:LO) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Lorillard Inc. (NYSE:LO). These stocks are Vector Group Ltd (NYSE:VGR), Philip Morris International Inc. (NYSE:PM), British American Tobacco PLC (ADR) (NYSEAMEX:BTI), Altria Group Inc (NYSE:MO), and Reynolds American, Inc. (NYSE:RAI). This group of stocks belong to the cigarettes industry and their market caps match LO's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Vector Group Ltd (NYSE:VGR)
Philip Morris International Inc. (NYSE:PM)
British American Tobacco PLC (ADR) (NYSEAMEX:BTI)
Altria Group Inc (NYSE:MO)
Reynolds American, Inc. (NYSE:RAI)
Using the returns shown by our studies, average investors should always track hedge fund and insider trading sentiment, and Lorillard Inc. (NYSE:LO) is an important part of this process.