One of the big headlines earlier this year involved American International Group's (NYSE:AIG) ascension to the top spot among hedge fund holdings. Knocking the reigning darling (Apple) from its top spot, the insurer was put back in the spotlight as it made strong headway in its recovery. But with the most recent quarter's 13F-HR filings showing that some hedge funds have exited their position in the company, is it safe to say that AIG's reign is over?

Making moves
Every quarter, investment managers with over $100 million in qualifying assets have to report their holdings to the SEC. It's in these reports that investors and analysts can tally the changes in holdings from period to period. As of year-end 2012, AIG was the top holding for hedge funds, with more coming on board.

But the most recent filings show that at least four prominent names on Wall Street have either significantly reduced their holdings or exited their positions in AIG completely:

Name Q1 2013 Reduction Ending Position
Soros Fund Management LLC 66% 2.89 million shares
ThirdPoint LLC 27% 13.5 million shares
Appaloosa Management LP 29% 4.3 million shares
Jana Partners LLC 100% n/a
Moore Capital Management LP 100% n/a

Source: Bloomberg. 

With names like George Soros, David Tepper, and Louis Moore Bacon taking money out of the insurer, some might think that it signals an end to the rally AIG has been enjoying so far this year.

Up 23.99% since the beginning of the year, AIG has certainly been on a good run. With its operations running smoothly, cost reductions pushing revenues through to the bottom line, and management carefully assessing their next moves, the company is almost back to full speed. But if the hedge funds are moving away from the company, that may signal their belief that the best has already been had.

Losing out
But if you look at AIG since the end of March, by which time the hedge funds had already cut their holdings, you can see that the stock has gained 18.31%. The company's stellar first-quarter earnings were largely responsible for that share price growth, and more is yet to come.

The company has yet to reinstate its dividend or announce a share buyback plan, both of which may be other reasons the funds bowed out. But with the company performing well and management assuring that those capital disbursements are in the works, it's a wonder the money managers would miss out just because they had to wait a bit longer.

With the stock still trading below tangible book value, some other big names in value investing have increased their holdings with AIG -- namely Bruce Berkowitz and Seth Klarman. Berkowitz has been invested in the insurer since before it was cool -- you might say he's the original AIG hipster -- with projections that the holding for his Fairholme Fund would quadruple in the next five to seven years. Klarman is the manager of Baupost Group LLC, a Boston-based hedge fund firm, who is also a value investor. Both increased their holdings of the insurer, along with BlackRock (the world's biggest asset management firm) and the Vanguard Group (the No. 1 U.S. mutual fund company).

In the end...
You need to believe in the investment thesis you've developed for AIG. Since the company is well on its way past recovery mode, if you think it's too late to join in on the gains, then you should make sure to reassess and act on your results. Otherwise, if you're invested in AIG, the upcoming dividend and share buybacks (though no timing is set in stone yet) may yield you further gains if you're patient. But since you're a Foolish long-term investor, that shouldn't be a problem, right?