FPA Crescent Fund recently released its Q1 2020 Investor Letter, a copy of which you can download here. The Fund posted a return of -20.51% for the quarter, underperforming its benchmark, the S&P 500 which returned -19.60% in the same quarter. You should check out FPA Crescent Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, FPA Crescent Fund highlighted a few stocks and American International Group Inc (NYSE:AIG) is one of them. American International Group is a finance and insurance company. Year-to-date, American International Group Inc (NYSE:AIG) stock lost 39.7% and on June 23rd it had a closing price of $32.05. Here is what FPA Crescent Fund said:
“During the initial market decline, AIG sank more than 60 percent, dramatically underperforming its peers in what we believe will prove to be an overreaction. Life insurance companies were down 40 percent to 50 percent while their property and casualty, or P&C, peers were down 20 percent to 30 percent.8 Our conviction in AIG stems from several factors. We do not think its life insurance business, which accounts for 40 percent of premiums, will be overly affected as we are thankfully seeing a flattening of the COVID-19 infection curve. Its P&C business, generating about 60 percent of premiums, does not cover pandemics. Some states have said they may try to force coverage of pandemics, but we are confident the U.S. Constitution does not allow such a retroactive revision. There also is a case to be made that reduced activity around the country will lower P&C claims. We believe that AIG has earnings power in the next few years of around $6 per share. Panicked selling caused its stock price to trade as low as an unchallenging 0.3 times tangible equity. We added to the Fund’s position in AIG on this weakness.”
In Q1 2020, the number of bullish hedge fund positions on American International Group Inc (NYSE:AIG) stock decreased by about 17% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with AIG’s upside potential. Our calculations showed that American International Group Inc (NYSE:AIG) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
