The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded American International Group Inc (NYSE:AIG) based on those filings.
Is American International Group Inc (NYSE:AIG) undervalued? Hedge funds are getting less bullish. The number of bullish hedge fund positions shrunk by 9 lately. Our calculations also showed that AIG 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). AIG was in 43 hedge funds’ portfolios at the end of March. There were 52 hedge funds in our database with AIG positions at the end of the previous quarter.
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.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s go over the recent hedge fund action regarding American International Group Inc (NYSE:AIG).
What does smart money think about American International Group Inc (NYSE:AIG)?
At the end of the first quarter, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AIG over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Pzena Investment Management held the most valuable stake in American International Group Inc (NYSE:AIG), which was worth $385.2 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $348.5 million worth of shares. First Pacific Advisors LLC, Levin Easterly Partners, and Arrowstreet Capital 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 Capital Returns Management allocated the biggest weight to American International Group Inc (NYSE:AIG), around 9.48% of its 13F portfolio. Spindletop Capital is also relatively very bullish on the stock, earmarking 9.12 percent of its 13F equity portfolio to AIG.
Seeing as American International Group Inc (NYSE:AIG) has faced bearish sentiment from hedge fund managers, it’s safe to say that there were a few fund managers that slashed their positions entirely last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $193 million in stock. Andreas Halvorsen’s fund, Viking Global, also sold off its stock, about $140.7 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 9 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to American International Group Inc (NYSE:AIG). We will take a look at Verisign, Inc. (NASDAQ:VRSN), EOG Resources Inc (NYSE:EOG), Zimmer Biomet Holdings Inc (NYSE:ZBH), and IQVIA Holdings, Inc. (NYSE:IQV). All of these stocks’ market caps resemble AIG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRSN | 41 | 5645444 | 3 |
| EOG | 44 | 801052 | 1 |
| ZBH | 51 | 621129 | -13 |
| IQV | 60 | 2473750 | -4 |
| Average | 49 | 2385344 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49 hedge funds with bullish positions and the average amount invested in these stocks was $2385 million. That figure was $1474 million in AIG’s case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand Verisign, Inc. (NASDAQ:VRSN) is the least popular one with only 41 bullish hedge fund positions. American International Group Inc (NYSE:AIG) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AIG as the stock returned 24% during the second quarter and outperformed the market by an even larger margin.
Follow American International Group Inc. (NYSE:AIG)
Follow American International Group Inc. (NYSE:AIG)
Disclosure: None. This article was originally published at Insider Monkey.
