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Here’s What Hedge Funds Think About American Equity Investment Life Holding Company (AEL)

Nina Todic

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 15 S&P 500 stocks among hedge funds at the end of December 2018 yielded an average return of 19.7% year-to-date, vs. a gain of 13.1% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of American Equity Investment Life Holding Company (NYSE:AEL).

American Equity Investment Life Holding Company (NYSE:AEL) shareholders have witnessed an increase in hedge fund sentiment lately. Our calculations also showed that ael isn't among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are dozens of methods investors have at their disposal to value their holdings. Some of the most underrated methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outclass the broader indices by a very impressive amount (see the details here).

Dmitry Balyasny

Let's take a look at the new hedge fund action regarding American Equity Investment Life Holding Company (NYSE:AEL).

How have hedgies been trading American Equity Investment Life Holding Company (NYSE:AEL)?

At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in AEL a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

No of Hedge Funds with AEL Positions

Among these funds, Citadel Investment Group held the most valuable stake in American Equity Investment Life Holding Company (NYSE:AEL), which was worth $43.1 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $34.1 million worth of shares. Moreover, GLG Partners, Balyasny Asset Management, and Renaissance Technologies were also bullish on American Equity Investment Life Holding Company (NYSE:AEL), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, established the most valuable position in American Equity Investment Life Holding Company (NYSE:AEL). Renaissance Technologies had $4.7 million invested in the company at the end of the quarter. Matthew Halbower's Pentwater Capital Management also initiated a $2.7 million position during the quarter. The other funds with brand new AEL positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Ken Griffin's Citadel Investment Group, and Ronald Hua's Qtron Investments.

Let's go over hedge fund activity in other stocks similar to American Equity Investment Life Holding Company (NYSE:AEL). These stocks are Floor & Decor Holdings, Inc. (NYSE:FND), Univar Inc (NYSE:UNVR), Altus Midstream Company (NASDAQ:ALTM), and Aspen Insurance Holdings Limited (NYSE:AHL). This group of stocks' market values are closest to AEL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FND,19,213377,-6 UNVR,23,701477,-10 ALTM,5,41552,-11 AHL,21,416077,1 Average,17,343121,-6.5 [/table]

View table here if you experience formatting issues.

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 $343 million. That figure was $112 million in AEL's case. Univar Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Altus Midstream Company (NASDAQ:ALTM) is the least popular one with only 5 bullish hedge fund positions. American Equity Investment Life Holding Company (NYSE:AEL) 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. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AEL wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); AEL investors were disappointed as the stock returned 2.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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