In this article, via an analysis based on the latest available Q4 institutional 13-F filings, we identify the insurance group companies that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets.
Taken together, these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are bearish on the insurance group, cutting a net $2.73 billion in Q4 from their $160.77 billion prior quarter position.
The following are the insurance companies that these mega fund managers are most bullish about (see table below):
Manulife Financial Corp. (MFC): MFC provides financial protection and wealth management products and services to individuals and group customers, primarily in Asia, Canada, and the U.S., including life insurance, group life and health insurance, long-term care services, pension products, annuities, mutual funds, and banking products.
Mega funds together added a net $244 million in Q4 to their $2.91 billion prior quarter position in the company, and taken together, mega funds hold 13.1% of the outstanding shares. The top buyer was Fidelity Investments ($237 million), and the top holder was Royal Bank of Canada ($1.83 billion). MFC has a dividend yield of 3.8% versus the 1.9% average for its peers, and it also trades at a discount 9.2 forward P/E and 1.1 P/B compared to averages of 10.0 and 0.6 for its peers in the life insurance group.
American International Group (AIG): AIG is a diversified insurance company that offers group and individual life insurance, annuities and general property and casualty insurance worldwide. Mega funds together added a net $12 million in Q4 to their $3.02 billion prior quarter position in the company, and taken together, mega funds hold 5.3% of the outstanding shares.
The top buyers were Wellington Management ($37 million) and JP Morgan Chase & Co. ($32 million), and the top holders were Vanguard Group ($517 million), Franklin Resources ($497 million) and State Street Corp. ($494 million). AIG shares have rallied strongly this year, up about 25% YTD. They trade at 10.7 forward P/E and 0.5 P/B compared to averages of 10.2 and 0.8 for its peers in the multi-line insurance group.
MBI Inc. (MBI): MBI offers financial guarantee insurance and related reinsurance, advisory and portfolio services for the public and structured finance markets, and asset management advisory services in the U.S. and internationally. Mega funds together added a net $1 million in Q4 to their $198 million prior quarter position in the company, and taken together, mega funds hold 10.2% of the outstanding shares.
The top buyer was BNY Mellon Corp. ($6 million), and the top holder was Vanguard Group ($69 million). MBI shares currently trade at 16-17 forward P/E and 1.2 P/B compared to averages of 10.2 and 0.8 for its peers in the multi-line insurance group.
Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following insurance stocks (see table below):
- Prudential Financial Inc. (PRU), one of the largest financial services institutions in the U.S., offering life insurance, annuities, mutual funds and retirement products in the U.S., Europe, Asia and Latin America, in which mega funds together cut a net $685 million in Q4, from their $9.73 billion prior quarter position in the company;
- MetLife Inc. (MET) offers life, non-medical health, auto and home-owners insurance, annuities and financial services, in which mega funds together cut a net $510 million in Q4, from their $13.63 billion prior quarter position in the company;
- Hartford Financial Services Group (HIG) offers individual and group life, group disability and property and casualty insurance products, primarily in the U.S., in which mega funds together cut a net $389 million in Q4, from their $3.34 billion prior quarter position in the company;
- Lincoln National Corp. (LNC), a diversified financial services company, offering life insurance and long-term care protection, annuities, individual and group retirement plans, and group benefits, in which mega funds together cut a net $353 million in Q4, from their $3.07 billion prior quarter position in the company;
- AFLAC Inc. (AFL), a provider of health, accident, disability and life insurance in the U.S. and Japan, in which mega funds together cut a net $163 million in Q4 from their $6.19 billion prior quarter position in the company;
- ING Group (ING), a Dutch financial services company that provides banking, investment, life insurance and retirement services worldwide to over 50 million private, corporate and institutional clients in 65 countries, in which mega funds together cut a net $54 million in Q4, from their $339 million prior quarter position in the company;
- Allstate Corp. (ALL), a provider of personal property, casualty, life insurance and retirement and other investment products, mainly in the U.S., in which mega funds together cut a net $45 million in Q4, from their $4.73 billion prior quarter position in the company;
- MGIC Investment Corp. (MTG), that offers private mortgage insurance for homeowners that put down less than 20% down payment when purchasing their homes, in which mega funds together cut a net $15 million in Q4, from their $226 million prior quarter position in the company;
- Genworth Financial Inc. (GNW), a leading U.S.-based international insurance company offering life and long-term care insurance, annuities, asset management services and mortgage insurance worldwide, in which mega funds together cut a net $11 million in Q4 from their $1.65 billion prior quarter position in the company; and
- Progressive Corp. Ohio (PGR), that offers private passenger automobile insurance policies in all 50 states and D.C., in which mega funds together cut a net $1 million in Q4 from their $3.73 billion prior quarter position in the company.
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Note to Table: The companies selected to be included in both the Top Buys and Sells and Top Holdings categories in the table above were picked on both an absolute basis, i.e. the highest dollar amounts of buys and/or sells, as well as those amounts relative to their market-cap. That way, the list is not biased towards the largest companies in the group.
General Methodology and Background Information: The latest available institutional 13-F filings of over 30+ mega hedge fund and mutual fund managers were analyzed to determine their capital allocation among different industry groupings, and to determine their favorite picks and pans in each group. These mega fund managers number less than one percent of all funds and yet they control almost half of the U.S. equity discretionary fund assets. The argument is that mega institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When mega Institutional Investors invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence.
This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.