Equity Investment Life Holding (AEL) increased sales, margins and distribution, nearly doubling the stock price of this insurance company in the last year, says Ori Elan, Managing Director and Portfolio Manager of Elessar Investment Management, who bought the stock for his small-cap strategy and has now seen it become one of his largest holdings.
“One stock that has done very well for us in 2013 is American Equity Investment Life Holding. The ticker for this company is AEL. It is an insurance company that sells index annuities and life insurance. Throughout the past couple of years, AEL was able to meaningfully grow its index annuity sales, expand investment spreads and also invest in their distribution channels and grow them, while seeing less competition from larger players in this area,” Elan said.
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Elan says AEL has grown in tandem with the appropriate capital structure, even despite difficult market conditions six years ago when he first bought the stock.
“When we look to invest in a company, we look for catalysts, positive inflection points down the road, which we expect to be realized within 12 to 18 months, and that’s when we expect our price target for that company to be achieved. So you can say that we look to hold a company in the portfolio for between 12 to 18 months. However, the sell discipline, which we strictly follow, can either cause the stock to stay longer or for a shorter period of time in the portfolio,” Elan said.
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