Should You Buy American Financial Group (AFG)?

In the financial world, there are a multitude of methods market participants can use to watch the equity markets. A pair of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can outclass their index-focused peers by a significant amount (see just how much).

Equally as necessary, optimistic insider trading activity is another way to look at the marketplace. There are plenty of stimuli for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).

Keeping this in mind, we’re going to examine the newest info about American Financial Group (NYSE:AFG).

Hedge fund activity in American Financial Group (NYSE:AFG)

In preparation for the third quarter, a total of 19 of the hedge funds we track were long in this stock, a change of 46% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly.

According to our 13F database, Cliff Asness’s AQR Capital Management had the biggest position in American Financial Group (NYSE:AFG), worth close to $43.5 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $11.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Anand Parekh’s Alyeska Investment Group and Millennium Management Subsidiary’s Decade Capital Management.

With a general bullishness amongst the titans, certain money managers have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, established the most outsized position in American Financial Group (NYSE:AFG). AQR Capital Management had 43.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $11.3 million position during the quarter. The other funds with brand new AFG positions are John Overdeck and David Siegel’s Two Sigma Advisors, Anand Parekh’s Alyeska Investment Group, and Millennium Management Subsidiary’s Decade Capital Management.

How are insiders trading American Financial Group (NYSE:AFG)?

Insider buying made by high-level executives is particularly usable when the company in question has seen transactions within the past 180 days. Over the last half-year time period, American Financial Group (NYSE:AFG) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to American Financial Group (NYSE:AFG). These stocks are White Mountains Insurance Group Ltd (NYSE:WTM), Markel Corporation (NYSE:MKL), RenaissanceRe Holdings Ltd. (NYSE:RNR), Validus Holdings, Ltd. (NYSE:VR), and HCC Insurance Holdings, Inc. (NYSE:HCC). This group of stocks belong to the property & casualty insurance industry and their market caps match AFG’s market cap.

Using the returns explained by our tactics, regular investors must always pay attention to hedge fund and insider trading activity, and American Financial Group (NYSE:AFG) is an important part of this process.

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