Is Affiliated Managers Group, Inc. (NYSE:AMG) a bargain? Hedge funds are in an optimistic mood. The number of bullish hedge fund positions advanced by 2 recently.
To most shareholders, hedge funds are assumed to be underperforming, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, we look at the upper echelon of this club, close to 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total capital, and by tracking their top stock picks, we have come up with a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Just as integral, optimistic insider trading activity is another way to break down the world of equities. Just as you’d expect, there are a number of reasons for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).
Keeping this in mind, let’s take a gander at the key action surrounding Affiliated Managers Group, Inc. (NYSE:AMG).
What have hedge funds been doing with Affiliated Managers Group, Inc. (NYSE:AMG)?
At the end of the fourth quarter, a total of 14 of the hedge funds we track were bullish in this stock, a change of 17% from the third quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially.
Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Affiliated Managers Group, Inc. (NYSE:AMG), worth close to $160 million, accounting for 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which held a $102 million position; 0% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Anand Parekh’s Alyeska Investment Group and Amy Minella’s Cardinal Capital.
Now, some big names have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, assembled the largest position in Affiliated Managers Group, Inc. (NYSE:AMG). Moore Global Investments had 2 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Steven Cohen’s SAC Capital Advisors.
How have insiders been trading Affiliated Managers Group, Inc. (NYSE:AMG)?
Insider buying is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the last half-year time frame, Affiliated Managers Group, Inc. (NYSE:AMG) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Affiliated Managers Group, Inc. (NYSE:AMG). These stocks are Eaton Vance Corp (NYSE:EV), Invesco Ltd. (NYSE:IVZ), Principal Financial Group Inc (NYSE:PFG), Oaktree Capital Group LLC (NYSE:OAK), and Carlyle Group LP (NASDAQ:CG). All of these stocks are in the asset management industry and their market caps are similar to AMG’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Eaton Vance Corp (NYSE:EV)||8||0||9|
|Invesco Ltd. (NYSE:IVZ)||23||0||6|
|Principal Financial Group Inc (NYSE:PFG)||11||1||14|
|Oaktree Capital Group LLC (NYSE:OAK)||11||0||0|
|Carlyle Group LP (NASDAQ:CG)||2||0||0|
With the results exhibited by Insider Monkey’s tactics, retail investors should always monitor hedge fund and insider trading activity, and Affiliated Managers Group, Inc. (NYSE:AMG) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.