Is American International Group Inc (NYSE:AIG) undervalued? Investors who are in the know are taking a bearish view. The number of long hedge fund positions were cut by 7 recently.
To the average investor, there are many gauges shareholders can use to analyze Mr. Market. A duo of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the broader indices by a solid amount (see just how much).
Equally as key, optimistic insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are plenty of reasons for an executive to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).
Keeping this in mind, we’re going to take a look at the latest action encompassing American International Group Inc (NYSE:AIG).
What have hedge funds been doing with American International Group Inc (NYSE:AIG)?
At year’s end, a total of 146 of the hedge funds we track held long positions in this stock, a change of -5% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully.
Of the funds we track, Fairholme (FAIRX), managed by Bruce Berkowitz, holds the largest position in American International Group Inc (NYSE:AIG). Fairholme (FAIRX) has a $3.3346 billion position in the stock, comprising 42.4% of its 13F portfolio. On Fairholme (FAIRX)’s heels is William B. Gray of Orbis Investment Management, with a $994.7 million position; the fund has 8.5% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Dan Loeb’s Third Point, Richard Perry’s Perry Capital and D. E. Shaw’s D E Shaw.
Seeing as American International Group Inc (NYSE:AIG) has experienced falling interest from the smart money, logic holds that there exists a select few hedgies that elected to cut their entire stakes at the end of the year. It’s worth mentioning that Andreas Halvorsen’s Viking Global dumped the biggest position of all the hedgies we key on, comprising close to $225.6 million in stock., and Rob Citrone of Discovery Capital Management was right behind this move, as the fund cut about $152.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 7 funds at the end of the year.
Insider trading activity in American International Group Inc (NYSE:AIG)
Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the last six-month time frame, American International Group Inc (NYSE:AIG) has seen 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to American International Group Inc (NYSE:AIG). These stocks are Loews Corporation (NYSE:L), The Chubb Corporation (NYSE:CB), The Allstate Corporation (NYSE:ALL), ACE Limited (NYSE:ACE), and Travelers Companies Inc (NYSE:TRV). This group of stocks are the members of the property & casualty insurance industry and their market caps are closest to AIG’s market cap.