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Is CIGNA Corporation (CI) A Good Stock To Buy After Rejecting Anthem’s Bid?

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Is CIGNA Corporation (NYSE:CI) a good stock to buy now? The stock skyrocketed by more than 11% on June 15 following a Wall Street Journal report that Anthem Inc (NYSE:ANTM) has shown interest in acquiring the insurance company at $175 per share, which was a 27% upside from where the CIGNA Corporation (NYSE:CI)’s stock was trading before June 15. However, a new report suggested that Anthem went public with an offer of $184 per share to acquire CIGNA, which raised the value of the deal $47.5 billion. However, in a statement CIGNA said that its board had rejected the offer from Anthem and said in a letter that they were deeply disappointed with the Anthem’s actions to go public with the takeover bid. The WSJ further said that Anthem is taking the offer public in order to put pressure on Cigna’s board through its shareholders. What will eventually come out of this takeover approach and attempt from Anthem is still unknown. But, how do the hedge funds feel about CIGNA Corporation (NYSE:CI) stock?CIGNA Corporation (NYSE:CI) We keep looking at the hedge fund sentiment and insider sentiment in order to get an outlook on the stock. Hedge funds are increasingly positive on the stock as the number of hedge fund positions in the stock went up from 42 at the end of the fourth quarter of 2015 to 50 at the end of March. Hedge fund sentiment is strongly positive for this stock.

We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 142%, nearly 2.5 times greater returns than the S&P 500 during the same period (see more details here).

Let’s take a look at insider transactions involving Cigna to get more insight into the stock. According to our database, there were no insider purchases during the first quarter, but there were many insider sales in the last couple of months. This shows a strong negative insider sentiment, which contradicts the opinion of hedge funds. With takeover attempts on the horizon, is it a good option to buy this stock at the moment?

Keeping this in mind, let’s take a look at the latest hedge fund action encompassing CIGNA Corporation (NYSE:CI).

Hedge fund activity in CIGNA Corporation (NYSE:CI)

At the end of the fourth quarter, 42 hedge funds were holding long positions in Cigna, but this number went up by 19% during the first quarter to 50 funds. Moreover, the aggregate value of positions held by the investors we track jumped to $229.47 million from $172.49 million during the first three months, which shows that overall hedge funds are bullish on the company.

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