As a $28 billion large-cap insurance company, it's no surprise that there's plenty of retail and institutional interest in insurer Aflac
Turns out, the view is bullish. Let's have a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts like Aflac. Data from Yahoo! Finance captures their collective feeling:
|
Strong Buy |
6 |
|
Buy |
7 |
|
Hold |
6 |
|
Sell |
0 |
|
Strong Sell |
0 |
Most analysts have a rating of buy or strong buy, with six "holds." For purposes of this exercise, we'll classify analyst opinion as bullish.
2. Insider buying
The insider buy/sell picture is less bullish. Over the past year, Aflac insiders have sold $20 million worth of their company stock. During the same time period, insiders didn't buy a single share of stock. (Data from Form4Oracle.) While these sums aren't large relative to the company's market cap, and while insiders sell stocks for a whole host of reasons, the trend isn't positive: Insider selling far outweighs insider buying.
Two good signs, though: CEO Daniel Amos personally owns more than $4.3 million of Aflac stock, nearly 1% of the company, and last fall, Aflac resumed its stock buyback program.
3. Guru buying
Next, we'll look at "guru" ownership of the stock. According to GuruFocus, gurus lean positive toward Aflac. Noted value investor Mario Gabelli added to his existing stake in the quarter ended Dec. 31, while fund manager Bill Nygren took a large position in the quarter ended Sept. 30. Earlier in 2010, though, gurus Ron Muhlenkamp, Ken Fisher, and Tom Gayner sold out of their Aflac stakes.
There isn't a whole lot of guru buying going on, but I'll classify the overall trend as neutral to bullish.
4. Retail investor community sentiment
For retail investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. Aflac has a strong four-star rating.
5. Short-sellers
Next we'll look at whether short-sellers are circling the stock. There are 6.7 million Aflac shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 1.4%. That's not very high -- a struggling operator like Barnes & Noble has a short interest of 13.5% right now -- and so for determining sentiment, we'll take it as a good sign.
6. Does Buffett own it?
This is the "cherry on top" test, and in Aflac's case, it's a no: Berkshire Hathaway does not own shares.
Adding it up
Aflac is liked by analysts and the CAPS community, and short-sellers aren't betting against the stock in a significant way. Gurus are bullish-to-neutral on the stock, even though insiders are net sellers. Add it all up and Aflac comes out with a "somewhat bullish" consensus sentiment.
Of course, you can't base an investment philosophy on who likes the stock you like, and a consensus opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." There's hardly a "greedy" sense surrounding Aflac right now, though.
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Aflac. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Aflac's movements, and for more analysis on Aflac, make sure you add it to your Watchlist.
