Is AFLAC Incorporated (AFL) Going to Burn These Hedge Funds?
Is AFLAC Incorporated (NYSE:AFL) a buy?
To many investors, hedge funds are viewed as bloated, old financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds trading today, this site looks at the bigwigs of this club, close to 525 funds. Analysts calculate that this group oversees the majority of the hedge fund industry's total capital, and by paying attention to their best investments, we've uncovered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as necessary, optimistic insider trading sentiment is a second way to analyze the investments you're interested in. As the old adage goes: there are lots of stimuli for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this tactic if piggybackers understand where to look (learn more here).
Now that that's out of the way, it's important to discuss the latest info for AFLAC Incorporated (NYSE:AFL).
What have hedge funds been doing with AFLAC Incorporated (NYSE:AFL)?
In preparation for the third quarter, a total of 31 of the hedge funds we track held long positions in this stock, a change of 11% from the first quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably.
According to our 13F database, Natixis Global Asset Management's Harris Associates had the biggest position in AFLAC Incorporated (NYSE:AFL), worth close to $378.3 million, accounting for 0.8% of its total 13F portfolio. On Harris Associates's heels is Ken Griffin of Citadel Investment Group, with a $116.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include John W. Rogers's Ariel Investments, Daniel Bubis's Tetrem Capital Management and Michael Messner's Seminole Capital (Investment Mgmt).
As industrywide interest increased, certain money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in AFLAC Incorporated (NYSE:AFL). Citadel Investment Group had 116.9 million invested in the company at the end of the quarter. John W. Rogers's Ariel Investments also initiated a $81.4 million position during the quarter. The other funds with brand new AFL positions are Daniel Bubis's Tetrem Capital Management, Michael Messner's Seminole Capital (Investment Mgmt), and Phill Gross and Robert Atchinson's Adage Capital Management.
Insider trading activity in AFLAC Incorporated (NYSE:AFL)
Bullish insider trading is particularly usable when the company we're looking at has experienced transactions within the past six months. Over the last 180-day time frame, AFLAC Incorporated (NYSE:AFL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to AFLAC Incorporated (NYSE:AFL). These stocks are PICO Holdings Inc (NASDAQ:PICO), StanCorp Financial Group, Inc. (NYSE:SFG), CNO Financial Group Inc (NYSE:CNO), Assurant, Inc. (NYSE:AIZ), and Unum Group (NYSE:UNM). All of these stocks are in the accident & health insurance industry and their market caps are closest to AFL's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
PICO Holdings Inc (NASDAQ:PICO)
StanCorp Financial Group, Inc. (NYSE:SFG)
CNO Financial Group Inc (NYSE:CNO)
Assurant, Inc. (NYSE:AIZ)
Unum Group (NYSE:UNM)
Using the returns shown by the previously mentioned research, average investors should always keep one eye on hedge fund and insider trading activity, and AFLAC Incorporated (NYSE:AFL) applies perfectly to this mantra.