The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot.
In this article, we’ll analyze what the smart money thinks of American International Group Inc (NYSE:AIG) and find out how it is affected by hedge funds’ moves. Moreover, at the end of this article we will also compare AIG to other stocks including Duke Energy Corp (NYSE:DUK), The Bank of Nova Scotia (USA) (NYSE:BNS), and Eni SpA (ADR) (NYSE:E) to get a better sense of its popularity.
Follow American International Group Inc. (NYSE:AIG)
Follow American International Group Inc. (NYSE:AIG)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
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Keeping this in mind, let’s take a peek at the recent action regarding American International Group Inc (NYSE:AIG).
Hedge fund activity in American International Group Inc (NYSE:AIG)
Heading into the fourth quarter of 2016, a total of 82 of the hedge funds tracked by Insider Monkey were long this stock, down by three funds compared to the end of June. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Carl Icahn’s Icahn Capital LP has the number one position in American International Group Inc (NYSE:AIG), worth close to $2.7086 billion, corresponding to 13.7% of its total 13F portfolio. The second most bullish fund manager is First Pacific Advisors LLC, led by Robert Rodriguez and Steven Romick, holding a $684.4 million position; 5.7% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism contain John Paulson’s Paulson & Co, Michael Lowenstein’s Kensico Capital and Richard S. Pzena’s Pzena Investment Management.
Due to the fact that American International Group Inc (NYSE:AIG) has faced declining sentiment from hedge fund managers, it’s safe to say that there were a few fund managers who were dropping their positions entirely heading into the fourth quarter. At the top of the heap, First Eagle Investment Management dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $441.8 million in stock. Richard Perry’s fund, Perry Capital, also said goodbye to its stock, about $195.7 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to American International Group Inc (NYSE:AIG). These stocks are Duke Energy Corp (NYSE:DUK), The Bank of Nova Scotia (USA) (NYSE:BNS), Eni SpA (ADR) (NYSE:E), and National Grid plc (ADR) (NYSE:NGG). This group of stocks’ market values resemble AIG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DUK | 19 | 640205 | 1 |
| BNS | 14 | 272621 | -1 |
| E | 4 | 24526 | -2 |
| NGG | 7 | 344186 | -2 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $320 million at the end of the third quarter. That figure was $6.70 billion in AIG’s case. Duke Energy Corp (NYSE:DUK) is the most popular stock in this table. On the other hand Eni SpA (ADR) (NYSE:E) is the least popular one with only four bullish hedge fund positions. Compared to these stocks American International Group Inc (NYSE:AIG) is significantly more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
