Chart of the Day – $AIG, The Largest Hedge Fund Long

by Enis March 25, 2013 3:31 pm • Commentary

AIG made headlines last month when the most recent 13-F filings showed that it had become the most widely held long position among large hedge funds, according to Insider Monkey, surpassing AAPL for the honor.  Many funds accumulated the stock on the government’s sales last year, as it exited its ownership position in the stock.  That gave the all-clear for many investors who had eyed the value in AIG for several years.

The stock trades at 0.57x book, even after its recent rally (more than 20% since mid-Nov).  Of course, for a complex balance sheet name like AIG, it’s hard to say what all those assets are worth.  But clearly, many hedge funds think it’s worth more than 0.57x book.

But if everyone’s long, are there still incremental buyers left for the stock?  Here’s the technical picture:  

[caption id="attachment_24057" align="alignnone" width="647"]10 month daily chart of AIG, Courtesy of Bloomberg 10 month daily chart of AIG, Courtesy of Bloomberg[/caption]


The stock’s been on a steady uptrend, shown by the rising 200 day ma in black.  The most important development, though, is shown by the lower volume panel.  There were 2 large sales of the government’s stake in the past 9 months, one in September, and the second (and final) sale in December.  I’ve circled the December sale in green.  Since then, the stock has found support at the 50 day ma throughout the past 3 months.

Going forward, I expect the stock to be range-bound between 35 and 40.  If the stock does pull all the way back to 35, near the rising 200 day ma, that would be a good long entry to join this hedge fund hotel.