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Were Hedge Funds Right About Flocking Into American National Insurance Company (ANAT) ?

Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 20% in 2019 (through September 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 24% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like American National Insurance Company (NASDAQ:ANAT).

Is American National Insurance Company (NASDAQ:ANAT) a bargain? Investors who are in the know are taking a bullish view. The number of bullish hedge fund positions advanced by 6 in recent months. Our calculations also showed that ANAT isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a lot of tools investors use to appraise their holdings. A couple of the most under-the-radar tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform their index-focused peers by a significant margin (see the details here).

AQR CAPITAL MANAGEMENT

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the recent hedge fund action surrounding American National Insurance Company (NASDAQ:ANAT).

How have hedgies been trading American National Insurance Company (NASDAQ:ANAT)?

At Q2’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in ANAT over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with ANAT Positions

The largest stake in American National Insurance Company (NASDAQ:ANAT) was held by Renaissance Technologies, which reported holding $25 million worth of stock at the end of March. It was followed by Lomas Capital Management with a $12.4 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and AQR Capital Management.

Now, key money managers have been driving this bullishness. Lomas Capital Management, managed by Daniel Lascano, established the largest position in American National Insurance Company (NASDAQ:ANAT). Lomas Capital Management had $12.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $6.4 million position during the quarter. The other funds with brand new ANAT positions are John Overdeck and David Siegel’s Two Sigma Advisors, Claes Fornell’s CSat Investment Advisory, and Andrew Weiss’s Weiss Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as American National Insurance Company (NASDAQ:ANAT) but similarly valued. These stocks are Rogers Corporation (NYSE:ROG), Colfax Corporation (NYSE:CFX), Schneider National, Inc. (NYSE:SNDR), and Merit Medical Systems, Inc. (NASDAQ:MMSI). This group of stocks’ market caps are similar to ANAT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ROG 19 77827 10
CFX 27 551842 -5
SNDR 21 96266 2
MMSI 17 236611 0
Average 21 240637 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $69 million in ANAT’s case. Colfax Corporation (NYSE:CFX) is the most popular stock in this table. On the other hand Merit Medical Systems, Inc. (NASDAQ:MMSI) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks American National Insurance Company (NASDAQ:ANAT) is even less popular than MMSI. Hedge funds clearly dropped the ball on ANAT as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on ANAT as the stock returned 7% during the third quarter and outperformed the market by an even larger margin.

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

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