Do Hedge Funds and Insiders Love Cincinnati Financial Corporation (CINF)?

Is Cincinnati Financial Corporation (NASDAQ:CINF) a buy right now? Investors who are in the know are selling. The number of long hedge fund positions were cut by 6 recently.

To most market participants, hedge funds are seen as underperforming, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the aristocrats of this group, around 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total capital, and by watching their top equity investments, we have revealed a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as integral, positive insider trading activity is another way to parse down the stock market universe. Obviously, there are many incentives for an executive to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this method if “monkeys” know what to do (learn more here).

With all of this in mind, it’s important to take a gander at the latest action surrounding Cincinnati Financial Corporation (NASDAQ:CINF).

What have hedge funds been doing with Cincinnati Financial Corporation (NASDAQ:CINF)?

At the end of the first quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of -40% from the first quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the biggest position in Cincinnati Financial Corporation (NASDAQ:CINF). First Eagle Investment Management has a $453.5 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Winton Capital Management, managed by David Harding, which held a $35.6 million position; 0.6% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group.

Seeing as Cincinnati Financial Corporation (NASDAQ:CINF) has experienced a declination in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their full holdings at the end of the first quarter. Intriguingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners dumped the largest investment of all the hedgies we monitor, totaling an estimated $1.4 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also dumped its stock, about $0.7 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 6 funds at the end of the first quarter.

How have insiders been trading Cincinnati Financial Corporation (NASDAQ:CINF)?

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time frame, Cincinnati Financial Corporation (NASDAQ:CINF) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Cincinnati Financial Corporation (NASDAQ:CINF). These stocks are Alleghany Corporation (NYSE:Y), XL Group plc (NYSE:XL), Cna Financial Corp (NYSE:CNA), Arch Capital Group Ltd. (NASDAQ:ACGL), and Everest Re Group Ltd (NYSE:RE). This group of stocks are the members of the property & casualty insurance industry and their market caps are closest to CINF’s market cap.

With the results exhibited by the aforementioned strategies, retail investors must always pay attention to hedge fund and insider trading activity, and Cincinnati Financial Corporation (NASDAQ:CINF) shareholders fit into this picture quite nicely.

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