Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards American International Group Inc (NYSE:AIG) at the end of the third quarter and determine whether the smart money was really smart about this stock.
American International Group Inc (NYSE:AIG) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 101. AIG shareholders have witnessed a decrease in hedge fund sentiment in recent months. There were 39 hedge funds in our database with AIG holdings at the end of June. Our calculations also showed that AIG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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 we’re going to take a glance at the new hedge fund action surrounding American International Group Inc (NYSE:AIG).
David Harding of Winton Capital Management
Do Hedge Funds Think AIG Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the second quarter of 2021. By comparison, 38 hedge funds held shares or bullish call options in AIG a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of American International Group Inc (NYSE:AIG), with a stake worth $923.7 million reported as of the end of September. Trailing Pzena Investment Management was First Pacific Advisors LLC, which amassed a stake valued at $455.3 million. Laurion Capital Management, Balyasny Asset Management, and Hosking Partners 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 First Pacific Advisors LLC allocated the biggest weight to American International Group Inc (NYSE:AIG), around 5.91% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 3.66 percent of its 13F equity portfolio to AIG.
Because American International Group Inc (NYSE:AIG) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds who sold off their positions entirely heading into Q4. Intriguingly, Matthew Stadelman’s Diamond Hill Capital cut the biggest position of the 750 funds monitored by Insider Monkey, comprising about $982.8 million in stock. Noam Gottesman’s fund, GLG Partners, also sold off its stock, about $11.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 9 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to American International Group Inc (NYSE:AIG). These stocks are Exelon Corporation (NASDAQ:EXC), TC Energy Corporation (NYSE:TRP), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Roper Technologies Inc. (NYSE:ROP), Monster Beverage Corp (NASDAQ:MNST), EOG Resources Inc (NYSE:EOG), and Palo Alto Networks Inc (NASDAQ:PANW). All of these stocks’ market caps resemble AIG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXC | 36 | 1108781 | 1 |
| TRP | 15 | 84084 | -7 |
| VRTX | 55 | 2713283 | -5 |
| ROP | 45 | 1667275 | 4 |
| MNST | 42 | 2134498 | -4 |
| EOG | 47 | 1024547 | 12 |
| PANW | 73 | 5899838 | 4 |
| Average | 44.7 | 2090329 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.7 hedge funds with bullish positions and the average amount invested in these stocks was $2090 million. That figure was $1904 million in AIG’s case. Palo Alto Networks Inc (NASDAQ:PANW) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 15 bullish hedge fund positions. American International Group Inc (NYSE:AIG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AIG is 17.8. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on AIG as the stock returned 5.8% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow American International Group Inc. (NYSE:AIG)
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Disclosure: None. This article was originally published at Insider Monkey.
