Is FBL Financial Group (FFG) A Good Stock to Buy?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in FBL Financial Group (NYSE:FFG).

Is FBL Financial Group (NYSE:FFG) worth your attention right now? Hedge funds are definitely taking a bullish view. The number of long hedge fund positions that are disclosed in regulatory 13F filings improved by 1 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as MRC Global Inc (NYSE:MRC), Proto Labs Inc (NYSE:PRLB), and Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

How have hedgies been trading FBL Financial Group (NYSE:FFG)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 20% rise from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards FFG over the last 5 quarters, which is still down slightly over the last year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, AQR Capital Management, led by Cliff Asness, holds the largest position in FBL Financial Group (NYSE:FFG). AQR Capital Management has a $2.5 million position in the stock. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $1.9 million position. Remaining peers that hold long positions include Ken Griffin’s Citadel Investment Group, Glenn Russell Dubin’s Highbridge Capital Management, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

As one would reasonably expect, some big names have been driving this bullishness. Citadel Investment Group established the biggest position in FBL Financial Group (NYSE:FFG). Citadel Investment Group had $0.6 million invested in the company at the end of the quarter. Highbridge Capital Management also made a $0.4 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as FBL Financial Group (NYSE:FFG) but similarly valued. We will take a look at MRC Global Inc (NYSE:MRC), Proto Labs Inc (NYSE:PRLB), Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), and Potlatch Corporation (NASDAQ:PCH). This group of stocks’ market values match FFG’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $6 million in FFG’s case. Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is the most popular stock in this table. On the other hand Proto Labs Inc (NYSE:PRLB) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks FBL Financial Group (NYSE:FFG) is even less popular than PRLB. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.

Disclosure: None