Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cincinnati Financial Corporation (NASDAQ:CINF).
Is Cincinnati Financial Corporation (NASDAQ:CINF) going to take off soon? The smart money was in an optimistic mood. The number of long hedge fund positions rose by 2 in recent months. Cincinnati Financial Corporation (NASDAQ:CINF) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 31. Our calculations also showed that CINF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
If you’d ask most market participants, hedge funds are assumed to be worthless, old investment vehicles of the past. While there are over 8000 funds in operation at present, We hone in on the masters of this group, around 850 funds. These investment experts watch over most of the smart money’s total asset base, and by monitoring their highest performing stock picks, Insider Monkey has identified many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Paul Marshall of Marshall Wace
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. Keeping this in mind we’re going to take a gander at the key hedge fund action encompassing Cincinnati Financial Corporation (NASDAQ:CINF).
Do Hedge Funds Think CINF Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in CINF over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Cincinnati Financial Corporation (NASDAQ:CINF) was held by Select Equity Group, which reported holding $816.3 million worth of stock at the end of December. It was followed by Marshall Wace LLP with a $21.7 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Interval Partners. In terms of the portfolio weights assigned to each position Select Equity Group allocated the biggest weight to Cincinnati Financial Corporation (NASDAQ:CINF), around 2.97% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, dishing out 0.47 percent of its 13F equity portfolio to CINF.
As one would reasonably expect, key money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Cincinnati Financial Corporation (NASDAQ:CINF). Marshall Wace LLP had $21.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $7.9 million position during the quarter. The following funds were also among the new CINF investors: Dmitry Balyasny’s Balyasny Asset Management, Michael Gelband’s ExodusPoint Capital, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cincinnati Financial Corporation (NASDAQ:CINF) but similarly valued. These stocks are Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Mid America Apartment Communities Inc (NYSE:MAA), ASE Technology Holding Co., Ltd. (NYSE:ASX), Penn National Gaming, Inc (NASDAQ:PENN), Nomura Holdings, Inc. (NYSE:NMR), MongoDB, Inc. (NASDAQ:MDB), and Principal Financial Group Inc (NASDAQ:PFG). This group of stocks’ market values resemble CINF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALNY | 33 | 740380 | -6 |
| MAA | 25 | 251877 | -1 |
| ASX | 8 | 232071 | -1 |
| PENN | 42 | 907475 | 1 |
| NMR | 10 | 19579 | 4 |
| MDB | 46 | 1540962 | 10 |
| PFG | 31 | 208237 | 5 |
| Average | 27.9 | 557226 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $557 million. That figure was $886 million in CINF’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Cincinnati Financial Corporation (NASDAQ:CINF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CINF is 46.7. 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 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on CINF, though not to the same extent, as the stock returned 15.6% since the end of Q1 (through July 16th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
