Is CB Stock A Buy or Sell?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Chubb Limited (NYSE:CB) based on that data.

Is CB stock a buy or sell? Hedge funds were turning less bullish. The number of long hedge fund bets decreased by 11 lately. Chubb Limited (NYSE:CB) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. Our calculations also showed that CB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Now let’s view the key hedge fund action surrounding Chubb Limited (NYSE:CB).

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

At the end of December, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CB over the last 22 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, Viking Global was the largest shareholder of Chubb Limited (NYSE:CB), with a stake worth $416.5 million reported as of the end of December. Trailing Viking Global was Polar Capital, which amassed a stake valued at $176 million. Adage Capital Management, Lomas Capital Management, and AQR Capital 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 Lomas Capital Management allocated the biggest weight to Chubb Limited (NYSE:CB), around 7.16% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, dishing out 1.91 percent of its 13F equity portfolio to CB.

Since Chubb Limited (NYSE:CB) has witnessed a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds that decided to sell off their entire stakes in the fourth quarter. It’s worth mentioning that Renaissance Technologies cut the biggest stake of all the hedgies watched by Insider Monkey, worth close to $37.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $19.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 11 funds in the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Chubb Limited (NYSE:CB) but similarly valued. These stocks are BP plc (NYSE:BP), CSX Corporation (NASDAQ:CSX), FedEx Corporation (NYSE:FDX), Crown Castle International Corp. (REIT) (NYSE:CCI), Lam Research Corporation (NASDAQ:LRCX), Duke Energy Corporation (NYSE:DUK), and Autodesk, Inc. (NASDAQ:ADSK). This group of stocks’ market valuations resemble CB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $2156 million. That figure was $1188 million in CB’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. Chubb Limited (NYSE:CB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CB is 21.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately CB wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); CB investors were disappointed as the stock returned 3.8% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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