Hedge Fund Sentiment Is Stagnant On Cincinnati Financial Corporation (CINF)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Cincinnati Financial Corporation (NASDAQ:CINF).

Hedge fund interest in Cincinnati Financial Corporation (NASDAQ:CINF) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CINF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare CINF to other stocks including Teleflex Incorporated (NYSE:TFX), Broadridge Financial Solutions, Inc. (NYSE:BR), and M&T Bank Corporation (NYSE:MTB) to get a better sense of its popularity.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.


Louis Navellier of Navellier & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a glance at the fresh hedge fund action surrounding Cincinnati Financial Corporation (NASDAQ:CINF).

Do Hedge Funds Think CINF Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in CINF a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Select Equity Group was the largest shareholder of Cincinnati Financial Corporation (NASDAQ:CINF), with a stake worth $672.5 million reported as of the end of June. Trailing Select Equity Group was Marshall Wace LLP, which amassed a stake valued at $36.1 million. Arrowstreet Capital, Citadel Investment Group, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Select Equity Group allocated the biggest weight to Cincinnati Financial Corporation (NASDAQ:CINF), around 2.3% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.37 percent of its 13F equity portfolio to CINF.

Judging by the fact that Cincinnati Financial Corporation (NASDAQ:CINF) has experienced declining sentiment from the smart money, it’s easy to see that there were a few money managers who sold off their entire stakes heading into Q3. Intriguingly, Parvinder Thiara’s Athanor Capital sold off the largest position of the 750 funds followed by Insider Monkey, totaling an estimated $1.4 million in stock. Qing Li’s fund, Sciencast Management, also said goodbye to its stock, about $0.7 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Cincinnati Financial Corporation (NASDAQ:CINF). We will take a look at Teleflex Incorporated (NYSE:TFX), Broadridge Financial Solutions, Inc. (NYSE:BR), M&T Bank Corporation (NYSE:MTB), Charles River Laboratories International Inc. (NYSE:CRL), Warner Music Group Corp. (NASDAQ:WMG), Shinhan Financial Group Co., Ltd. (NYSE:SHG), and Incyte Corporation (NASDAQ:INCY). This group of stocks’ market valuations are closest to CINF’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TFX 30 701718 -3
BR 27 315722 5
MTB 46 539380 10
CRL 44 1217955 2
WMG 29 793609 2
SHG 5 31985 -1
INCY 34 3644056 2
Average 30.7 1034918 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $1035 million. That figure was $781 million in CINF’s case. M&T Bank Corporation (NYSE:MTB) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 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. Our overall hedge fund sentiment score for CINF is 47. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on CINF as the stock returned 5.3% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.