Hedge Funds Dumped ANTM, HUM and Bought Cigna Corporation (CI)

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 Cigna Corporation (NYSE:CI). We already reported that hedge funds started cashing out of Anthem and Humana (see here),

Cigna Corporation (NYSE:CI) was in 74 hedge funds’ portfolios at the end of the first quarter of 2020. CI investors should pay attention to an increase in hedge fund interest lately. There were 72 hedge funds in our database with CI positions at the end of the previous quarter. Our calculations also showed that CI isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Larry Robbins of Glenview Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea.  For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the new hedge fund action encompassing Cigna Corporation (NYSE:CI).

Hedge fund activity in Cigna Corporation (NYSE:CI)

Heading into the second quarter of 2020, a total of 74 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CI over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Andreas Halvorsen’s Viking Global has the biggest position in Cigna Corporation (NYSE:CI), worth close to $451.4 million, amounting to 2.3% of its total 13F portfolio. The second most bullish fund manager is BloombergSen, led by Jonathan Bloomberg, holding a $261.5 million call position; 22.5% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism comprise Larry Robbins’s Glenview Capital, Michael Lowenstein’s Kensico Capital and Farallon Capital. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to Cigna Corporation (NYSE:CI), around 23.32% of its 13F portfolio. Tavio Capital is also relatively very bullish on the stock, designating 18.01 percent of its 13F equity portfolio to CI.

Consequently, specific money managers were leading the bulls’ herd. Rhenman & Partners Asset Management, managed by Henrik Rhenman, initiated the largest position in Cigna Corporation (NYSE:CI). Rhenman & Partners Asset Management had $18.6 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $16.2 million investment in the stock during the quarter. The following funds were also among the new CI investors: John D. Gillespie’s Prospector Partners, Brad Farber’s Atika Capital, and Jonathan Kolatch’s Redwood Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Cigna Corporation (NYSE:CI). We will take a look at PetroChina Company Limited (NYSE:PTR), Lowe’s Companies, Inc. (NYSE:LOW), Fiserv, Inc. (NASDAQ:FISV), and Caterpillar Inc. (NYSE:CAT). This group of stocks’ market caps are closest to CI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 44.75 hedge funds with bullish positions and the average amount invested in these stocks was $2262 million. That figure was $2988 million in CI’s case. Lowe’s Companies, Inc. (NYSE:LOW) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Cigna Corporation (NYSE:CI) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Unfortunately CI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CI were disappointed as the stock returned 6.7% during the second quarter (through May 22nd) 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 most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.