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Hedge Funds Are Nibbling Ok National Western Life Group Inc. (NWLI)

In this article we will check out the progression of hedge fund sentiment towards National Western Life Group Inc. (NASDAQ:NWLI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is National Western Life Group Inc. (NASDAQ:NWLI) a superb stock to buy now? Prominent investors are buying. The number of bullish hedge fund bets advanced by 1 recently. Our calculations also showed that NWLI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). NWLI was in 7 hedge funds’ portfolios at the end of March. There were 6 hedge funds in our database with NWLI holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Arbiter Partners Capital Management's Returns, AUM and Holdings

Paul Isaac of Arbiter Partners Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the key hedge fund action regarding National Western Life Group Inc. (NASDAQ:NWLI).

How have hedgies been trading National Western Life Group Inc. (NASDAQ:NWLI)?

At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in NWLI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in National Western Life Group Inc. (NASDAQ:NWLI), worth close to $3.8 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions contain Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Paul J. Isaac’s Arbiter Partners Capital Management. In terms of the portfolio weights assigned to each position Arbiter Partners Capital Management allocated the biggest weight to National Western Life Group Inc. (NASDAQ:NWLI), around 0.11% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, designating 0.0038 percent of its 13F equity portfolio to NWLI.

Consequently, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, created the most valuable position in National Western Life Group Inc. (NASDAQ:NWLI). Millennium Management had $1.6 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as National Western Life Group Inc. (NASDAQ:NWLI) but similarly valued. We will take a look at MSG Networks Inc (NYSE:MSGN), FB Financial Corporation (NYSE:FBK), The E.W. Scripps Company (NASDAQ:SSP), and Standex International Corp. (NYSE:SXI). All of these stocks’ market caps resemble NWLI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSGN 24 179071 -4
FBK 11 37526 6
SSP 12 74208 0
SXI 9 20088 -3
Average 14 77723 -0.25

View table here if you experience formatting issues.

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 $78 million. That figure was $10 million in NWLI’s case. MSG Networks Inc (NYSE:MSGN) is the most popular stock in this table. On the other hand Standex International Corp. (NYSE:SXI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks National Western Life Group Inc. (NASDAQ:NWLI) is even less popular than SXI. Hedge funds clearly dropped the ball on NWLI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on NWLI as the stock returned 27.4% so far in the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.