Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the successful investors’ consensus returns have been exceptional. The top 30 mid-cap stocks among the best performing hedge funds in our database yielded an average return of 18% during the last 12 months, outperforming the S&P 500 Index funds by double digits. Although the successful funds occasionally have their duds, such as SunEdison and Valeant, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cincinnati Financial Corporation (NASDAQ:CINF) .
Cincinnati Financial Corporation (NASDAQ:CINF) has seen an increase in hedge fund interest of late. CINF was in 18 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with CINF holdings at the end of the previous quarter. At the end of this article we will also compare CINF to other stocks including Ultrapar Participacoes SA (ADR) (NYSE:UGP), Martin Marietta Materials, Inc. (NYSE:MLM), and Alcoa Inc (NYSE:AA) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about Cincinnati Financial Corporation (NASDAQ:CINF)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 6% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in CINF at the beginning of this year. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, David Harding’s Winton Capital Management holds the largest position in Cincinnati Financial Corporation (NASDAQ:CINF), worth around $26.5 million. On Winton Capital Management’s heels is Jim Simons’ Renaissance Technologies, which holds a $19.9 million position. Some other members of the smart money that are bullish comprise Phill Gross and Robert Atchinson’s Adage Capital Management, D. E. Shaw’s D E Shaw and Ken Fisher’s Fisher Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, specific money managers were breaking ground themselves. Alec Litowitz and Ross Laser’s Magnetar Capital assembled the most valuable position in Cincinnati Financial Corporation (NASDAQ:CINF). Magnetar Capital had $0.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Sander Gerber’s Hudson Bay Capital Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now review hedge fund activity in other stocks similar to Cincinnati Financial Corporation (NASDAQ:CINF). We will take a look at Ultrapar Participacoes SA (ADR) (NYSE:UGP), Martin Marietta Materials, Inc. (NYSE:MLM), Alcoa Inc (NYSE:AA), and Centene Corp (NYSE:CNC). All of these stocks’ market caps match CINF’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $993 million. That figure was $121 million in CINF’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (ADR) (NYSE:UGP) is the least popular one with only 10 bullish hedge fund positions. Cincinnati Financial Corporation (NASDAQ:CINF) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MLM might be a better candidate to consider taking a long position in.