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.
Cigna Corporation (NYSE:CI) was in 63 hedge funds’ portfolios at the end of June. The all time high for this statistic is 76. CI investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 53 hedge funds in our database with CI holdings at the end of March. Our calculations also showed that CI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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.
Larry Robbins of Glenview Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a gander at the fresh hedge fund action encompassing Cigna Corporation (NYSE:CI).
Do Hedge Funds Think CI Is A Good Stock To Buy Now?
At Q2’s end, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from one quarter earlier. By comparison, 72 hedge funds held shares or bullish call options in CI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Jonathan Bloomberg’s BloombergSen has the largest call position in Cigna Corporation (NYSE:CI), worth close to $327.9 million, corresponding to 17.2% of its total 13F portfolio. The second largest stake is held by Larry Robbins of Glenview Capital, with a $304.5 million position; the fund has 5.1% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Robert Pitts’s Steadfast Capital Management, Israel Englander’s Millennium Management and Andrew Wellington and Jeff Keswin’s Lyrical Asset Management. In terms of the portfolio weights assigned to each position BloombergSen allocated the biggest weight to Cigna Corporation (NYSE:CI), around 17.24% of its 13F portfolio. Solel Partners is also relatively very bullish on the stock, setting aside 14.82 percent of its 13F equity portfolio to CI.
As aggregate interest increased, key hedge funds have jumped into Cigna Corporation (NYSE:CI) headfirst. Lyrical Asset Management, managed by Andrew Wellington and Jeff Keswin, created the most outsized position in Cigna Corporation (NYSE:CI). Lyrical Asset Management had $213.1 million invested in the company at the end of the quarter. Renaissance Technologies also made a $34.1 million investment in the stock during the quarter. The other funds with brand new CI positions are Charles Clough’s Clough Capital Partners, Vishal Saluja and Pham Quang’s Endurant Capital Management, and D. E. Shaw’s D E Shaw.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cigna Corporation (NYSE:CI) but similarly valued. We will take a look at Enbridge Inc (NYSE:ENB), The PNC Financial Services Group Inc. (NYSE:PNC), Brookfield Asset Management Inc. (NYSE:BAM), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), FedEx Corporation (NYSE:FDX), The Bank of Nova Scotia (NYSE:BNS), and Mercadolibre Inc (NASDAQ:MELI). This group of stocks’ market caps are closest to CI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENB | 19 | 166071 | -3 |
| PNC | 38 | 727612 | -1 |
| BAM | 34 | 1657528 | 0 |
| PBR | 25 | 2799044 | -2 |
| FDX | 61 | 2170185 | -2 |
| BNS | 14 | 223095 | -5 |
| MELI | 74 | 4024188 | 5 |
| Average | 37.9 | 1681103 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.9 hedge funds with bullish positions and the average amount invested in these stocks was $1681 million. That figure was $2807 million in CI’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 14 bullish hedge fund positions. Cigna Corporation (NYSE:CI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CI is 75.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately CI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CI were disappointed as the stock returned -12.4% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Cigna Holding Co (NYSE:CI)
Follow Cigna Holding Co (NYSE:CI)
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Disclosure: None. This article was originally published at Insider Monkey.
