We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Cigna Corporation (NYSE:CI).
Is Cigna Corporation (NYSE:CI) the right pick for your portfolio? Prominent investors are getting more optimistic. The number of bullish hedge fund bets went up by 7 in recent months. Our calculations also showed that CI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). CI was in 72 hedge funds’ portfolios at the end of December. There were 65 hedge funds in our database with CI holdings at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations We are probably at the peak of the COVID-19 pandemic, so we check out this biotech investor’s coronavirus picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the fresh hedge fund action regarding Cigna Corporation (NYSE:CI).
What have hedge funds been doing with Cigna Corporation (NYSE:CI)?
At Q4’s end, a total of 72 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CI over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Cigna Corporation (NYSE:CI) was held by Glenview Capital, which reported holding $854.1 million worth of stock at the end of September. It was followed by Farallon Capital with a $306.7 million position. Other investors bullish on the company included BloombergSen, Kensico Capital, and Lakewood Capital Management. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to Cigna Corporation (NYSE:CI), around 22.65% of its 13F portfolio. BloombergSen is also relatively very bullish on the stock, setting aside 15.22 percent of its 13F equity portfolio to CI.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, assembled the most valuable position in Cigna Corporation (NYSE:CI). Viking Global had $93.5 million invested in the company at the end of the quarter. Craig Peskin and Peter Fleiss’s Solel Partners also made a $40.4 million investment in the stock during the quarter. The following funds were also among the new CI investors: Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Steve Cohen’s Point72 Asset Management, and Jeremy Green’s Redmile Group.
Let’s check out hedge fund activity in other stocks similar to Cigna Corporation (NYSE:CI). These stocks are Truist Financial Corporation (NYSE:TFC), Tesla Inc. (NASDAQ:TSLA), CNOOC Limited (NYSE:CEO), and The Estee Lauder Companies Inc (NYSE:EL). This group of stocks’ market caps match CI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $1463 million. That figure was $4119 million in CI’s case. Tesla Inc. (NASDAQ:TSLA) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Cigna Corporation (NYSE:CI) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 1.0% in 2020 through April 20th but still managed to beat the market by 11 percentage points. Hedge funds were also right about betting on CI, though not to the same extent, as the stock returned -7.7% in 2020 (through April 20th) and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.