American Equity Investment Life Holding (NYSE:AEL) has experienced an increase in enthusiasm from smart money of late.
In the eyes of most investors, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the aristocrats of this club, around 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total asset base, and by monitoring their top equity investments, we have uncovered a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as key, optimistic insider trading activity is another way to break down the financial markets. Obviously, there are many reasons for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if investors know where to look (learn more here).
With all of this in mind, we’re going to take a peek at the key action regarding American Equity Investment Life Holding (NYSE:AEL).
What have hedge funds been doing with American Equity Investment Life Holding (NYSE:AEL)?
At year’s end, a total of 14 of the hedge funds we track were long in this stock, a change of 17% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully.
According to our comprehensive database, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in American Equity Investment Life Holding (NYSE:AEL). Pzena Investment Management has a $25 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $17 million position; 0% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Andy Redleaf’s Whitebox Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Brian Taylor’s Pine River Capital Management.
Consequently, key money managers have been driving this bullishness. Pine River Capital Management, managed by Brian Taylor, initiated the biggest position in American Equity Investment Life Holding (NYSE:AEL). Pine River Capital Management had 2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1 million investment in the stock during the quarter. The following funds were also among the new AEL investors: Mike Vranos’s Ellington and Paul Tudor Jones’s Tudor Investment Corp.
What have insiders been doing with American Equity Investment Life Holding (NYSE:AEL)?
Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past six months. Over the last six-month time frame, American Equity Investment Life Holding (NYSE:AEL) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to American Equity Investment Life Holding (NYSE:AEL). These stocks are Citizens, Inc. (NYSE:CIA), Kansas City Life Insurance Co (NASDAQ:KCLI), Primerica, Inc. (NYSE:PRI), Symetra Financial Corporation (NYSE:SYA), and National Western Life Insurance Company (NASDAQ:NWLI). This group of stocks are the members of the life insurance industry and their market caps resemble AEL’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Citizens, Inc. (NYSE:CIA)||1||0||0|
|Kansas City Life Insurance Co (NASDAQ:KCLI)||1||0||0|
|Primerica, Inc. (NYSE:PRI)||15||0||12|
|Symetra Financial Corporation (NYSE:SYA)||14||0||0|
|National Western Life Insurance Company (NASDAQ:NWLI)||4||0||0|
With the returns exhibited by our research, everyday investors should always watch hedge fund and insider trading activity, and American Equity Investment Life Holding (NYSE:AEL) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.