Is Cna Financial Corp (CNA) A Good Stock To Buy?

The SEC requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have compiled an extensive database of more than 700 of those successful funds and prominent investors’ filings. In this article, we analyze how these successful funds and prominent investors traded Cna Financial Corp (NYSE:CNA) based on those filings.

Is Cna Financial Corp (NYSE:CNA) going to take off soon? Money managers are actually turning less bullish. The number of bullish hedge fund positions went down by 3 lately. CNA was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. There were 21 hedge funds in our database with CNA positions at the end of the previous quarter. At the end of this article we will also compare CNA to other stocks including Alleghany Corporation (NYSE:Y), The Gap Inc. (NYSE:GPS), and Iron Mountain Incorporated (NYSE:IRM) 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 Cna Financial Corp (NYSE:CNA)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 14% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in CNA heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies  holds the biggest position in Cna Financial Corp (NYSE:CNA). Renaissance Technologies has a $28.9 million position in the stock. Sitting at the No. 2 spot is Pacifica Capital Investments led by Steve Leonard, holding a $13.2 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism encompass Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Roger Ibbotson’s Zebra Capital 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.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. Intriguingly, Clint Carlson’s Carlson Capital cut the biggest position of all the investors followed by Insider Monkey, comprising close to $11.3 million in stock. Robert Raiff’s fund, Raiff Partners, also cut its stock, about $1.6 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cna Financial Corp (NYSE:CNA) but similarly valued. These stocks are Alleghany Corporation (NYSE:Y), The Gap Inc. (NYSE:GPS), Iron Mountain Incorporated (NYSE:IRM), and Arthur J. Gallagher & Co. (NYSE:AJG). This group of stocks’ market caps are closest to CNA’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $60 million in CNA’s case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Arthur J. Gallagher & Co. (NYSE:AJG) is the least popular one with only 12 bullish hedge fund positions. Cna Financial Corp (NYSE:CNA) 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 GPS might be a better candidate to consider taking a long position in.

Disclosure: None