Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
American National Insurance Company (NASDAQ:ANAT) was in 13 hedge funds’ portfolios at the end of September. ANAT has experienced an increase in hedge fund interest in recent months. There were 10 hedge funds in our database with ANAT positions at the end of the previous quarter. At the end of this article we will also compare ANAT to other stocks including Cabot Corp (NYSE:CBT), Outfront Media Inc (NYSE:OUT), and Rayonier Inc. (NYSE:RYN) to get a better sense of its popularity.
Follow American National Insurance Co (NASDAQ:ANAT)
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Hedge fund activity in American National Insurance Company (NASDAQ:ANAT)
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 30% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in ANAT over the last 5 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, has the number one position in American National Insurance Company (NASDAQ:ANAT), worth close to $19 million. On Renaissance Technologies’ heels is AQR Capital Management, led by Cliff Asness, which holds a $3.2 million position. Some other hedge funds and institutional investors with similar optimism include Roger Ibbotson’s Zebra Capital Management, Ken Griffin’s Citadel Investment Group and Brian Taylor’s Pine River Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key hedge funds have been driving this bullishness. Citadel Investment Group, led by Ken Griffin, established the biggest position in American National Insurance Company (NASDAQ:ANAT). Citadel Investment Group had $1.1 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $0.6 million investment in the stock during the quarter. The only other fund with a brand new ANAT position is Thomas Bailard’s Bailard Inc.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as American National Insurance Company (NASDAQ:ANAT) but similarly valued. We will take a look at Cabot Corp (NYSE:CBT), Outfront Media Inc (NYSE:OUT), Rayonier Inc. (NYSE:RYN), and Monolithic Power Systems, Inc. (NASDAQ:MPWR). All of these stocks’ market caps match ANAT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBT | 19 | 188841 | -1 |
| OUT | 16 | 230145 | -2 |
| RYN | 15 | 346535 | 5 |
| MPWR | 19 | 185808 | 1 |
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 $238 million. That figure was $30 million in ANAT’s case. Cabot Corp (NYSE:CBT) is the most popular stock in this table. On the other hand Rayonier Inc. (NYSE:RYN) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks American National Insurance Company (NASDAQ:ANAT) is even less popular than RYN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
