Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Chubb Limited (NYSE:CB) in this article.
Is Chubb Limited (NYSE:CB) worth your attention right now? Hedge funds were getting more optimistic. The number of long hedge fund positions went up by 7 in recent months. Chubb Limited (NYSE:CB) was in 40 hedge funds’ portfolios at the end of June. The all time high for this statistics is 50. Our calculations also showed that CB 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Robert Atchinson of Adage Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. Keeping this in mind we’re going to review the recent hedge fund action surrounding Chubb Limited (NYSE:CB).
How are hedge funds trading Chubb Limited (NYSE:CB)?
At second quarter’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in CB a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Chubb Limited (NYSE:CB) was held by Citadel Investment Group, which reported holding $282.4 million worth of stock at the end of June. It was followed by Viking Global with a $278.8 million position. Other investors bullish on the company included Polar Capital, AQR Capital Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Capital Returns Management allocated the biggest weight to Chubb Limited (NYSE:CB), around 8.76% of its 13F portfolio. Highline Capital Management is also relatively very bullish on the stock, designating 3.95 percent of its 13F equity portfolio to CB.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in Chubb Limited (NYSE:CB). Point72 Asset Management had $63.7 million invested in the company at the end of the quarter. Stanley Druckenmiller’s Duquesne Capital also made a $35.8 million investment in the stock during the quarter. The other funds with brand new CB positions are Dmitry Balyasny’s Balyasny Asset Management, Louis Bacon’s Moore Global Investments, and Daniel Lascano’s Lomas Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Chubb Limited (NYSE:CB) but similarly valued. These stocks are Ecolab Inc. (NYSE:ECL), Takeda Pharmaceutical Company Limited (NYSE:TAK), U.S. Bancorp (NYSE:USB), Applied Materials, Inc. (NASDAQ:AMAT), Illinois Tool Works Inc. (NYSE:ITW), America Movil SAB de CV (NYSE:AMX), and The Southern Company (NYSE:SO). This group of stocks’ market values match CB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECL | 46 | 2099678 | 8 |
| TAK | 18 | 790266 | -4 |
| USB | 48 | 6299135 | -3 |
| AMAT | 58 | 2461809 | 2 |
| ITW | 35 | 565341 | 1 |
| AMX | 11 | 97994 | 0 |
| SO | 38 | 360503 | 5 |
| Average | 36.3 | 1810675 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1811 million. That figure was $1288 million in CB’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand America Movil SAB de CV (NYSE:AMX) is the least popular one with only 11 bullish hedge fund positions. Chubb Limited (NYSE:CB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CB is 64.9. 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 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately CB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CB were disappointed as the stock returned 3.3% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Chubb Corp (Old Insider Filings) (NYSE:CB)
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Disclosure: None. This article was originally published at Insider Monkey.
