American International Group Inc (AIG) Shares Slump Despite Stronger Than Expected Financial Results

The shares of American International Group Inc (NYSE:AIG) are up by 9.17% year-to-date and are currently trading at $61.79. The smart money were slightly bearish on the stock at the end of the first quarter with 101 hedge funds holding $10.65 billion worth of stock, versus 116 funds with $11.65 billion at the end of the fourth quarter of 2014. In addition to Fairholme and Omega Advisors, the insurance company attracted investments from the likes of John Paulson’s Paulson & Co, Richard Perry’s Perry Capital, and Michael Lowenstein’s Kensico Capital.

Despite lower profit margins and slightly bearish hedge fund sentiment, we will recommend investors to initiate positions at current weakness. The company is working towards increasing shareholder value and with its buyback programs, it is likely to move towards sustainable growth in the future.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 123% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.

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