Are Investors Right to Be Bullish on American Equity Investment Life Holding (AEL)?

Now, key hedge funds have jumped into American Equity Investment Life Holding (NYSE:AEL) headfirst. Point72 Asset Management, family office of Steve Cohen, established the biggest position in American Equity Investment Life Holding (NYSE:AEL). The fund had $10.1 million invested in the company at the end of the quarter. Anton Schutz’s Mendon Capital Advisors also made a $4.6 million investment in the stock during the quarter. The other funds with new positions in the stock are D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s now take a look at the hedge fund activity in other stocks – not necessarily in the same industry as American Equity Investment Life Holding (NYSE:AEL) but similarly valued. We will take a look at GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), Columbia Banking System Inc (NASDAQ:COLB), Werner Enterprises, Inc. (NASDAQ:WERN), and Shanda Games Limited(ADR) (NASDAQ:GAME). This group of stocks’ market valuations is similar to American Equity Investment Life Holding (NYSE:AEL)’s market valuation.

As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) is the most popular stock in this table, with 19 hedge funds holding shares, whereas Shanda Games Limited(ADR) (NASDAQ:GAME) was in the portfolio of only 7 hedge funds. American Equity Investment Life Holding (NYSE:AEL) outranks these stocks, both in terms of the number of hedge funds holdings’ and the aggregate value of hedge fund positions, which stands at $243 million, which might suggest that the stock is worth to be added to your portfolio. Still, we would suggest  an in-depth analysis and further research before initiating a position.