In this article we will analyze whether CNA Financial Corporation (NYSE:CNA) 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.
CNA Financial Corporation (NYSE:CNA) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 21. CNA shareholders have witnessed an increase in enthusiasm from smart money of late. There were 16 hedge funds in our database with CNA holdings at the end of December. Our calculations also showed that CNA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Do Hedge Funds Think CNA Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in CNA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in CNA Financial Corporation (NYSE:CNA). Arrowstreet Capital has a $29 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $9.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish contain Israel Englander’s Millennium Management, Dmitry Balyasny’s Balyasny Asset Management and Steve Leonard’s Pacifica Capital Investments. In terms of the portfolio weights assigned to each position Pacifica Capital Investments allocated the biggest weight to Cna Financial Corporation (NYSE:CNA), around 2.45% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, dishing out 1 percent of its 13F equity portfolio to CNA.
As aggregate interest increased, key money managers have jumped into CNA Financial Corporation (NYSE:CNA) headfirst. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in CNA Financial Corporation (NYSE:CNA). Point72 Asset Management had $1.4 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $0.6 million position during the quarter. The other funds with brand new CNA positions are Ran Pang’s Quantamental Technologies, Peter Muller’s PDT Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks similar to CNA Financial Corporation (NYSE:CNA). We will take a look at Signature Bank (NASDAQ:SBNY), Graco Inc. (NYSE:GGG), Atmos Energy Corporation (NYSE:ATO), Chegg Inc (NYSE:CHGG), Annaly Capital Management, Inc. (NYSE:NLY), Advance Auto Parts, Inc. (NYSE:AAP), and AMERCO (NASDAQ:UHAL). This group of stocks’ market valuations are closest to CNA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBNY | 40 | 925856 | 12 |
| GGG | 25 | 327418 | 0 |
| ATO | 15 | 172475 | -10 |
| CHGG | 33 | 672189 | 0 |
| NLY | 15 | 140155 | -6 |
| AAP | 43 | 1284543 | 7 |
| UHAL | 23 | 661125 | 2 |
| Average | 27.7 | 597680 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $598 million. That figure was $74 million in CNA’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 15 bullish hedge fund positions. CNA Financial Corporation (NYSE:CNA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNA is 42.3. 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 negative signal and 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately CNA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CNA investors were disappointed as the stock returned 0.5% since the end of March (through 7/16) 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 most of these stocks already outperformed the market in 2021.
Follow Cna Financial Corp (NYSE:CNA)
Follow Cna Financial Corp (NYSE:CNA)
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Disclosure: None. This article was originally published at Insider Monkey.
