In this article we will analyze whether Cigna Corporation (NYSE:CI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Cigna (CI) a good stock to buy now? Hedge funds were in a pessimistic mood. The number of bullish hedge fund bets retreated by 10 in recent months. Cigna Corporation (NYSE:CI) was in 62 hedge funds’ portfolios at the end of September. The all time high for this statistics is 76. Our calculations also showed that CI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 72 hedge funds in our database with CI positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a multitude of signals stock market investors have at their disposal to analyze stocks. Some of the most under-the-radar signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a very impressive amount (see the details here).
Larry Robbins of Glenview Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. With all of this in mind let’s view the recent hedge fund action regarding Cigna Corporation (NYSE:CI).
How are hedge funds trading Cigna Corporation (NYSE:CI)?
Heading into the fourth quarter of 2020, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the second quarter of 2020. By comparison, 65 hedge funds held shares or bullish call options in CI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the number one position in Cigna Corporation (NYSE:CI). Viking Global has a $245 million position in the stock, comprising 0.9% of its 13F portfolio. The second most bullish fund manager is BloombergSen, managed by Jonathan Bloomberg, which holds a $244.7 million call position; the fund has 17.7% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions include Larry Robbins’s Glenview Capital, Martin Taylor’s Crake Asset Management and Michael Lowenstein’s Kensico Capital. In terms of the portfolio weights assigned to each position BloombergSen allocated the biggest weight to Cigna Corporation (NYSE:CI), around 17.74% of its 13F portfolio. Solel Partners is also relatively very bullish on the stock, dishing out 13.55 percent of its 13F equity portfolio to CI.
Due to the fact that Cigna Corporation (NYSE:CI) has witnessed declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of funds who sold off their positions entirely in the third quarter. Interestingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP cut the biggest investment of the 750 funds followed by Insider Monkey, worth about $88.6 million in stock. Samuel Isaly’s fund, OrbiMed Advisors, also dumped its stock, about $82.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 10 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Cigna Corporation (NYSE:CI). We will take a look at Illinois Tool Works Inc. (NYSE:ITW), NetEase, Inc (NASDAQ:NTES), VMware, Inc. (NYSE:VMW), CME Group Inc (NASDAQ:CME), Automatic Data Processing, Inc. (NASDAQ:ADP), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), and CSX Corporation (NASDAQ:CSX). This group of stocks’ market valuations are closest to CI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ITW | 39 | 565865 | 4 |
| NTES | 45 | 3666807 | 7 |
| VMW | 31 | 468712 | -11 |
| CME | 59 | 2577224 | -1 |
| ADP | 42 | 1927660 | -7 |
| REGN | 44 | 1404179 | -5 |
| CSX | 58 | 3253140 | 12 |
| Average | 45.4 | 1980512 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.4 hedge funds with bullish positions and the average amount invested in these stocks was $1981 million. That figure was $2752 million in CI’s case. CME Group Inc (NASDAQ:CME) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Cigna Corporation (NYSE:CI) is more popular among hedge funds. Our overall hedge fund sentiment score for CI is 69.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on CI as the stock returned 25.1% since the end of September (through 12/2) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Cigna Holding Co (NYSE:CI)
Follow Cigna Holding Co (NYSE:CI)
Disclosure: None. This article was originally published at Insider Monkey.
