Where Do Hedge Funds Stand On AFLAC Incorporated (AFL)?

·5 min read

In this article we will analyze whether AFLAC Incorporated (NYSE:AFL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

AFLAC Incorporated (NYSE:AFL) has seen an increase in activity from the world's largest hedge funds recently. AFLAC Incorporated (NYSE:AFL) was in 34 hedge funds' portfolios at the end of September. The all time high for this statistic is 36. There were 33 hedge funds in our database with AFL positions at the end of the second quarter. Our calculations also showed that AFL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

John Rogers’ Top 10 Stock Picks
John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

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. With all of this in mind let's view the fresh hedge fund action regarding AFLAC Incorporated (NYSE:AFL).

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

At Q3's end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2021. On the other hand, there were a total of 34 hedge funds with a bullish position in AFL a year ago. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Is AFL A Good Stock To Buy?
Is AFL A Good Stock To Buy?

More specifically, Ariel Investments was the largest shareholder of AFLAC Incorporated (NYSE:AFL), with a stake worth $80.1 million reported as of the end of September. Trailing Ariel Investments was Citadel Investment Group, which amassed a stake valued at $24.2 million. Polar Capital, AQR Capital Management, and Adage Capital Management 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 Mountain Road Advisors allocated the biggest weight to AFLAC Incorporated (NYSE:AFL), around 1.28% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, earmarking 0.73 percent of its 13F equity portfolio to AFL.

As aggregate interest increased, key hedge funds have been driving this bullishness. TwinBeech Capital, managed by Jinghua Yan, assembled the largest position in AFLAC Incorporated (NYSE:AFL). TwinBeech Capital had $7.2 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $6.1 million investment in the stock during the quarter. The other funds with brand new AFL positions are Greg Eisner's Engineers Gate Manager, Qing Li's Sciencast Management, and Bruce Kovner's Caxton Associates LP.

Let's now take a look at hedge fund activity in other stocks similar to AFLAC Incorporated (NYSE:AFL). We will take a look at The Hershey Company (NYSE:HSY), NatWest Group plc (NYSE:NWG), Welltower Inc. (NYSE:WELL), TransDigm Group Incorporated (NYSE:TDG), Rockwell Automation Inc. (NYSE:ROK), First Republic Bank (NYSE:FRC), and International Flavors & Fragrances Inc (NYSE:IFF). This group of stocks' market caps match AFL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSY,33,1274071,-5 NWG,7,8068,2 WELL,22,508861,3 TDG,63,7188554,6 ROK,29,519693,4 FRC,35,918312,1 IFF,46,2838241,-6 Average,33.6,1893686,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $1894 million. That figure was $224 million in AFL's case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 7 bullish hedge fund positions. AFLAC Incorporated (NYSE:AFL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AFL is 58.4. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately AFL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AFL were disappointed as the stock returned 4.5% since the end of September (through 11/30) 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.

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