It's not everyday that Apple (NASDAQ:AAPL) gets dethroned, much less by an insurance company. The hedge fund darling is finding itself in an unfamiliar spot as AIG (NYSE:AIG) has usurped its position as the top stock among money managers. As the insurance giant continues its recovery from the financial crisis, investors have by and large shunned the company because of its history, but this may be a turning point for AIG.

Making moves
With over 117 hedge funds holding AIG shares, of which 80 have AIG in their top 10 holdings (versus only 67 for Apple), the insurance company topped Goldman Sachs' hedge fund VIP list based on fourth-quarter buying and selling information released last week. This news refutes the idea that money managers are moving away from the insurer, after headlines warned of 35%+ reductions of AIG shares in both billionaire George Soros' holdings and the Och-Ziff Capital Management (NYSE:SCU) fund. Och-Ziff reduced its holdings in AIG by a substantial 50% in the fourth quarter.

AIG was previously Soros' No. 1 holding, but the investment guru reduced his shares by 37% in the fourth quarter. His portfolio now sports Citigroup (NYSE:C) as its top holding, after Soros increased his shares in the financial company by 435%. Both AIG and Citigroup continue to trade below book value, providing investors with a discounted share price.

Old news
This flocking of hedge funds to AIG is a tale of follow the leader. Fairholme Fund manager Bruce Berkowitz has been touting the potential for investors to win big by buying up AIG shares. It seems that other money managers have learned a few lessons from Berkowitz on the upside of AIG ownership. In a recent interview with Bloomberg, Berkowitz said that he expects his top holdings in AIG (No. 1) and Bank of America (NYSE:BAC) (No.2) to quadruple in the next five to seven years. Until recently, most would have hesitated to follow in Berkowitz's footsteps, but with the operational improvements seen at AIG, it's certain that a new trend has started.

Main Street
Everyday investors will have to catch up to the money managers if they want to cash in on the opportunity AIG presents. But it's not too late yet. The company is attractively priced, improving its underwriting practices, and has shed the last of its government ownership -- all positive factors that investors should pay attention to. As AIG becomes more popular and continues to improve its business, investors will have a harder time acquiring shares with so much potential upside -- as the stock price increases and approaches book value, its current discount will narrow.

The insurer is set to release its fourth-quarter results this evening after the closing bell, with a corresponding conference call tomorrow morning. If analyst predictions are correct, AIG will be reporting a slower quarter than its previous four, with a reduction in revenue and earnings. This might cause the share price to recede, allowing average investors to jump in. Just remember the old Buffett adage: "Be fearful when others are greedy, and greedy when others are fearful." If others believe AIG will continue in a downward trend, which analysts do not expect, that may give you a great opening. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.