Were Hedge Funds Right Betting On These Finance Stocks in Q4?

#3 American International Group Inc (NYSE:AIG)

-Hedge Funds with Long Positions (as of September 30): 94

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $8.42 billion

American International Group Inc (NYSE:AIG) turned out to be one of the best-performing large-cap financial stocks of 2015 in spite of witnessing a decline in popularity among hedge funds during the third quarter. The number of funds bullish on the stock declined by five and the aggregate value of their holdings in the company dropped by almost $3 billion between July and September. Nevertheless, the stock of the company shot through the roof following the release of its third-quarter results, helping it to end the fourth quarter up by almost 10%.

Billionaire investor Carl Icahn disclosing a large stake in the company and going activist on it during the fourth quarter is also one of the reasons why the stock of American International Group exhibited such a decent during that period. After disclosing that he owns 3.42% of the company, which made Icahn Capital the company’s fifth largest shareholder, Mr. Icahn sent a letter to American International Group Inc’s CEO, Peter Hancock, proposing that the company takes measures to improve its return on equity and splits its businesses into three public companies to face less scrutiny from regulators. In November, Mr. Icahn issued a statement on his website highlighting that he will push for measures that will allow shareholders of the company to “express their views directly to the board, which may include a proposal to add a new director who would agree in advance to success Mr. Hancock as CEO if asked by the board to do so”.

Mr. Hancock has started a counter-attack against activist investors like Mr. Icahn. However, several investors and analysts remain skeptical if he would be able to garner much support, especially when many industry experts are still doubtful of  his ability to lead American International Group.