Were These Hedge Funds Right About Buying American International Group Inc (AIG)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of American International Group Inc (NYSE:AIG).

American International Group Inc (NYSE:AIG) investors should be aware of an increase in enthusiasm from smart money recently. American International Group Inc (NYSE:AIG) was in 39 hedge funds’ portfolios at the end of June. The all time high for this statistic is 101. Our calculations also showed that AIG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Richard S. Pzena of Pzena Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, 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. Keeping this in mind we’re going to review the fresh hedge fund action surrounding American International Group Inc (NYSE:AIG).

Do Hedge Funds Think AIG Is A Good Stock To Buy Now?

At second quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AIG over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the most valuable position in American International Group Inc (NYSE:AIG), worth close to $982.8 million, corresponding to 3.7% of its total 13F portfolio. The second most bullish fund manager is Richard S. Pzena of Pzena Investment Management, with a $870.1 million position; 3.4% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Jeremy Hosking’s Hosking Partners and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position First Pacific Advisors LLC allocated the biggest weight to American International Group Inc (NYSE:AIG), around 5.15% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, designating 3.73 percent of its 13F equity portfolio to AIG.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in American International Group Inc (NYSE:AIG). Balyasny Asset Management had $71.3 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $13.5 million position during the quarter. The following funds were also among the new AIG investors: Daniel Johnson’s Gillson Capital, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks similar to American International Group Inc (NYSE:AIG). These stocks are Barclays PLC (NYSE:BCS), Microchip Technology Incorporated (NASDAQ:MCHP), Amphenol Corporation (NYSE:APH), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Baxter International Inc. (NYSE:BAX), Prudential Financial Inc (NYSE:PRU), and Las Vegas Sands Corp. (NYSE:LVS). This group of stocks’ market caps resemble AIG’s market cap.

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As you can see these stocks had an average of 41.6 hedge funds with bullish positions and the average amount invested in these stocks was $2529 million. That figure was $2745 million in AIG’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand Barclays PLC (NYSE:BCS) is the least popular one with only 11 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 overall hedge fund sentiment score for AIG is 45.7. 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. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on AIG as the stock returned 24.6% since the end of the second quarter (through 11/5) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.