Should You Avoid American Financial Group (AFG)?

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Due to the fact that American Financial Group (NYSE:AFG) has experienced a falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who were dropping their full holdings in the third quarter. Intriguingly, John Overdeck and David Siegel’s Two Sigma Advisors dumped the biggest investment of the 700 funds followed by Insider Monkey, totaling close to $1.8 million in stock. Millennium Management Subsidiary’s fund, Blue Arrow Capital Management, also cut its stock, about $1.8 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as American Financial Group (NYSE:AFG) but similarly valued. We will take a look at W.P. Carey Inc. REIT (NYSE:WPC), Toll Brothers Inc (NYSE:TOL), Cadence Design Systems Inc (NASDAQ:CDNS), and The Middleby Corporation (NASDAQ:MIDD). This group of stocks’ market values resembles American Financial Group (NYSE:AFG)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WPC 11 108928 -1
TOL 34 646135 1
CDNS 28 1483917 -3
MIDD 20 566957 -3

As you can see, these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $701 million. That figure was $139 million in American Financial Group (NYSE:AFG)’s case. Toll Brothers Inc (NYSE:TOL) is the most popular stock in this table. On the other hand, W.P. Carey Inc. REIT (NYSE:WPC) is the least popular one with only 11 bullish hedge fund positions. American Financial Group (NYSE:AFG) 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, Toll Brothers Inc (NYSE:TOL) might be a better candidate to consider a long position.

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