Are Investors Right to Be Bullish on American Equity Investment Life Holding (AEL)?

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, lower commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding American Equity Investment Life Holding (NYSE:AEL).

American Equity Investment Life Holding (NYSE:AEL) has seen an increase in hedge fund sentiment recently and could be found in 24 hedge funds’ portfolios at the end of the third quarter of 2015. In comparison, there were 12 hedge funds in our database with American Equity Investment Life Holding (NYSE:AEL) positions at the end of the previous quarter. 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 GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), Columbia Banking System Inc (NASDAQ:COLB), and Werner Enterprises, Inc. (NASDAQ:WERN) to gather more data points.

To the average investor, there are a large number of metrics shareholders have at their disposal to analyze stocks. A couple of the less known metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a healthy amount (see the details here).

Keeping this in mind, we’re going to take a gander at the new action regarding American Equity Investment Life Holding (NYSE:AEL).

How are hedge funds trading American Equity Investment Life Holding (NYSE:AEL)?

At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 100% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Anand Parekh’s Alyeska Investment Group has the number one position in American Equity Investment Life Holding (NYSE:AEL), worth close to $74.3 million, comprising 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $63.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.