Is American Financial Group, Inc. (AFG) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider American Financial Group, Inc. (NYSE:AFG) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is American Financial Group, Inc. (NYSE:AFG) worth your attention right now? Prominent investors were becoming less confident. The number of long hedge fund bets retreated by 2 recently. American Financial Group, Inc. (NYSE:AFG) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic is 30. Our calculations also showed that AFG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with AFG positions at the end of the first quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital Management

With all of this in mind we’re going to take a peek at the latest hedge fund action regarding American Financial Group, Inc. (NYSE:AFG).

Do Hedge Funds Think AFG Is A Good Stock To Buy Now?

At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in AFG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Millennium Management was the largest shareholder of American Financial Group, Inc. (NYSE:AFG), with a stake worth $79.2 million reported as of the end of June. Trailing Millennium Management was Citadel Investment Group, which amassed a stake valued at $36 million. Balyasny Asset Management, Gillson Capital, and Millennium Management 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 Bishop Rock Capital allocated the biggest weight to American Financial Group, Inc. (NYSE:AFG), around 3.19% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, dishing out 3.05 percent of its 13F equity portfolio to AFG.

Due to the fact that American Financial Group, Inc. (NYSE:AFG) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there were a few money managers who were dropping their full holdings last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $12.3 million in stock. fund, Renaissance Technologies, also cut its stock, about $11.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as American Financial Group, Inc. (NYSE:AFG) but similarly valued. These stocks are Brookfield Renewable Partners L.P. (NYSE:BEP), Lamar Advertising Company (REIT) (NASDAQ:LAMR), Lear Corporation (NYSE:LEA), China Southern Airlines Co Ltd (NYSE:ZNH), Vereit Inc (NYSE:VER), Bausch Health Companies Inc. (NYSE:BHC), and Universal Display Corporation (NASDAQ:OLED). This group of stocks’ market caps resemble AFG’s market cap.

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As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $968 million. That figure was $220 million in AFG’s case. Bausch Health Companies Inc. (NYSE:BHC) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 2 bullish hedge fund positions. American Financial Group, Inc. (AFG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AFG is 41.8. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on AFG as the stock returned 18% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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