It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Cincinnati Financial Corporation (NASDAQ:CINF) during the quarter below.
Cincinnati Financial Corporation (NASDAQ:CINF) shareholders have witnessed an increase in hedge fund sentiment recently. At the end of this article, we will also compare Cincinnati Financial Corporation (NASDAQ:CINF) to other stocks, including Quest Diagnostics Inc (NYSE:DGX), Cemex SAB de CV (ADR) (NYSE:CX), and Snap-on Incorporated (NYSE:SNA) to get a better sense of its popularity.
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In today’s marketplace, there are a large number of formulas shareholders use to value stocks. A couple of the most innovative formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outclass the broader indices by a healthy amount (see the details here).
Keeping this in mind, let’s view the key action surrounding Cincinnati Financial Corporation (NASDAQ:CINF).
How have hedgies been trading Cincinnati Financial Corporation (NASDAQ:CINF)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 35% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Winton Capital Management, managed by David Harding, holds the biggest position in Cincinnati Financial Corporation (NASDAQ:CINF). Winton Capital Management has a $28.9 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by D E Shaw, with an $18.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Chuck Royce’s Royce & Associates, and Ken Fisher’s Fisher Asset Management.
Now, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Cincinnati Financial Corporation (NASDAQ:CINF). Citadel Investment Group had $2.2 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $1 million investment in the stock during the quarter. The following funds were also among the new Cincinnati Financial Corporation (NASDAQ:CINF) investors: Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Peter Muller’s PDT Partners, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s go over hedge fund activity in other stocks similar to Cincinnati Financial Corporation (NASDAQ:CINF). We will take a look at Quest Diagnostics Inc (NYSE:DGX), Cemex SAB de CV (ADR) (NYSE:CX), Snap-on Incorporated (NYSE:SNA), and Voya Financial Inc (NYSE:VOYA). This group of stocks’ market values resembles Cincinnati Financial Corporation (NASDAQ:CINF)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DGX | 27 | 317876 | -5 |
| CX | 18 | 186344 | -3 |
| SNA | 31 | 585872 | 6 |
| VOYA | 35 | 1097599 | -5 |
As you can see, these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $547 million. That figure was $653 million in Cincinnati Financial Corporation (NASDAQ:CINF)’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand, Cemex SAB de CV (ADR) (NYSE:CX) is the least popular one with only 18 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, Voya Financial Inc (NYSE:VOYA) might be a better candidate to consider a long position.
