We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards American National Insurance Company (NASDAQ:ANAT).
American National Insurance Company (NASDAQ:ANAT) investors should pay attention to an increase in hedge fund sentiment of late. 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 Blackbaud, Inc. (NASDAQ:BLKB), ProAssurance Corporation (NYSE:PRA), and Valero Energy Partners LP (NYSE:VLP) to gather more data points.
To most market participants, hedge funds are seen as unimportant, outdated investment vehicles of the past. While there are over 8000 funds with their doors open today, Our researchers hone in on the bigwigs of this group, about 700 funds. These money managers direct most of the smart money’s total capital, and by keeping an eye on their best equity investments, Insider Monkey has formulated a few investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s go over the latest action encompassing American National Insurance Company (NASDAQ:ANAT).
What does the smart money think about American National Insurance Company (NASDAQ:ANAT)?
Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 23% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’ Renaissance Technologies has the most valuable position in American National Insurance Company (NASDAQ:ANAT), worth close to $8.8 million, corresponding to less than 0.1% of its total 13F portfolio. The second largest stake is held by Arbiter Partners Capital Management, run by Paul J. Isaac, which holds an $8.3 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management and Daniel Lascano’s Lomas Capital Management.
As one would reasonably expect, some big names have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, established the most valuable position in American National Insurance Company (NASDAQ:ANAT). According to its latest 13F filing, the fund had $2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new ANAT investors: Bruce Silver’s Silver Capital Management LLC and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks similar to American National Insurance Company (NASDAQ:ANAT). We will take a look at Blackbaud, Inc. (NASDAQ:BLKB), ProAssurance Corporation (NYSE:PRA), Valero Energy Partners LP (NYSE:VLP), and Aaron’s, Inc. (NYSE:AAN). This group of stocks’ market values are closest to ANAT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. ANAT has only managed to attract $44 million in investments from hedge funds. Aaron’s, Inc. (NYSE:AAN) is the most popular stock in this table, while Valero Energy Partners LP (NYSE:VLP) lags behind with only 5 bullish hedge fund positions. American National Insurance Company (NASDAQ:ANAT) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AAN might be a better candidate to consider a long position.