In this article, we discuss the 10 stocks better than AMC according to hedge funds.
Stocks that offer little in terms of basic fundamentals but have become popular based on interest from retail investors have exploded in value over the past few months. AMC Entertainment Holdings, Inc. (NYSE: AMC), the Kansas-based entertainment firm, is one such equity. The stock has been the subject of a short squeeze – the short interest on the stock remains high at close to 19% – but short-sellers have suffered losses of almost $4.5 billion so far this year in betting against the company, according to data from analytics firm S3 Partners.
AMC Entertainment Holdings, Inc. has had a mixed year so far, missing market estimates on revenue and earnings per share in the first quarter but beating them in the second quarter. The company remains on top of an S3 Partners list of stocks that short sellers might be tempted to cash in on. At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $404 million in AMC Entertainment Holdings, Inc., up from 19 in the preceding quarter worth $34 million.
Some of the stocks that investors should look towards instead of AMC Entertainment Holdings, Inc. include Workday, Inc. (NASDAQ: WDAY), Analog Devices, Inc. (NASDAQ:ADI), and Bausch Health Companies Inc. (NYSE: BHC), among others. The company still faces an uphill battle in increasing revenue. According to a report presented at a cinema forum in Dubai, the global cinema industry is expected to remain behind 2019 levels for another three years, with a full recovery not expected until 2024.
This will make it even harder for AMC Entertainment Holdings, Inc. to create shareholder value in the next few years. Market experts believe that initiating a short squeeze on the stock will also be a little difficult because of the increased share count. As the firm burns through available cash without increasing revenue, a crash seems more and more likely. In addition, as cinema attendances in the US continue to decline, as they have been since 2002, it is possible the firm will not return to pre-pandemic numbers at all. The firm has a long-term debt of around $5.4 billion, enough to sustain the firm into 2022 at the present cash burn rate unless it innovates.
The influx of retail investors on the market and the rise of AMC has baffled market experts. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Myke Simon on Unsplash
Our Methodology
With this context in mind, here is our list of the 10 stocks better than AMC according to hedge funds. These stocks were picked from a database of 873 hedge funds and their holdings tracked by Insider Monkey. The list is ranked according to the number of hedge funds having stakes in each firm.
Only those firms that rank higher than AMC in our database and have seen an increase in the number of hedge funds having stakes in them at the end of the second quarter of 2021, as compared to the filings for the first quarter of the year, were selected.
Our criteria selects stocks whose hedge fund sentiment is better than that of AMC and which have positive analyst ratings and long-term growth catalysts.
The basic business fundamentals and analyst ratings of each stock are also discussed to provide readers with some more context for their investment decisions.
Stocks Better than AMC According to Hedge Funds
10. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 21
Upstart Holdings, Inc. (NASDAQ:UPST) is placed tenth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. according to hedge funds. The firm owns and runs a cloud-based lending platform that uses artificial intelligence. It is headquartered in California.
On September 20, investment advisory Barclays maintained an Overweight rating on Upstart Holdings, Inc. stock and raised the price target to $345 from $230. Ramsey El-Assal, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Upstart Holdings, Inc., up from 13 the preceding quarter worth $1.7 billion.
Just like Workday, Inc., Analog Devices, Inc., and Bausch Health Companies Inc., Upstart Holdings, Inc. is one of the stocks attracting the attention of elite investors.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
9. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 40
Ovintiv Inc. (NYSE:OVV) is ranked ninth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. according to hedge funds. The company has interests in the mining sector and is headquartered in Colorado.
On August 17, investment advisory Bank of America reinstated coverage of Ovintiv Inc. stock with a Buy rating and a price target of $38, noting that the firm had a “line of sight” on debt reduction that would transfer value to the equity.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Ovintiv Inc. with 3.9 million shares worth more than $123 million.
In addition to Workday, Inc., Analog Devices, Inc., and Bausch Health Companies Inc., Ovintiv Inc. is one of the stocks attracting the attention of hedge funds.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Ovintiv Inc. (NYSE:OVV) was one of them. Here is what the fund said:
“Energy holdings in Ovintiv also experienced detracted performance, as oil demand collapsed due to the pandemic. With approximately 70% of oil demand used for transportation, the decline in miles driven (i.e., U.S. miles driven are down 11% in 2020) and the far bigger 60–70% decline in global air passenger traffic led to a dramatic drop in oil prices.
It is our expectation that oil demand will remain weak for the foreseeable future, as flying and driving slowly recover, and that over the long term, electric vehicles and renewable energy will also decrease demand for fossil fuels. As a result, we sold out of our energy positions in 2020. We redeployed the assets in other sectors such as financial services that also saw falling stock prices, but where we had stronger conviction that the long-term health of their business was strong.”
8. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 43
The Mosaic Company (NYSE:MOS) is a Florida-based company that produces and markets crop nutrients. It is placed eighth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. according to hedge funds.
On August 20, investment advisory HSBC upgraded The Mosaic Company stock to Buy from Hold and raised the price target to $39 from $37, noting the firm would benefit from strong fertilizer prices in the second half of 2021.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $808 million in The Mosaic Company, up from 38 in the preceding quarter worth $944 million.
In its Q1 2021 investor letter, Appleseed Fund, an asset management firm, highlighted a few stocks and The Mosaic Company (NYSE:MOS) was one of them. Here is what the fund said:
“Our most significant contributors to the Fund’s equity performance during the quarter (includes) Mosaic Company (MOS). As for Mosaic, its share price has risen in sympathy with increasing grain prices, which should stimulate additional farmer investment into improving crop yields.”
7. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 43
Chewy, Inc. (NYSE:CHWY) is a Florida-based firm that owns and runs an ecommerce platform specializing in pet products. It is ranked seventh on our list of 10 stocks better than AMC Entertainment Holdings, Inc. according to hedge funds.
On September 26, investment advisory Credit Suisse assumed coverage of Chewy, Inc. stock with an Outperform rating and a price target of $121. Rick Patel, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Chewy, Inc. with 1.4 million shares worth more than $115 million.
Workday, Inc., Analog Devices, Inc., and Bausch Health Companies Inc. are some of the top stocks to buy right now, just like Chewy, Inc..
In its Q4 2020 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Chewy, Inc. (NYSE:CHWY) was one of them. Here is what the fund said:
“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.
Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.
In addition to one-time sales, Chewy is creating a recurring revenue model through its “autoship” program. This is essentially a subscription service for products that are sent at intervals specified by customers and includes such items as food and medicine. Customers are more profitable the longer they stay with the company, as their “lifetime value” grows. The company is organized around providing an exceptional customer experience. Chewy has 10 fulfillment centers scattered across the US, which enable cost-efficient overnight shipments to about 80% of the U.S. population and cost-efficient two-day shipments to nearly 100%. This allows Chewy to provide excellent service to the company’s more than 12.7 million active users.
Chewy’s ability operate profitably in the future hinges on two key variables: growing its customer base and more efficiently managing its fulfillment costs through automation of its fulfillment centers, thereby decreasing labor costs. Chewy has a smart, experienced management team and the company is expected to become profitable at the end of this fiscal year.”
6. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 43
Teladoc Health, Inc. (NYSE:TDOC) is placed sixth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. according to hedge funds. The firm markets virtual healthcare services and is headquartered in New York.
On July 28, investment advisory BTIG maintained a Buy rating on Teladoc Health, Inc. stock but lowered the price target to $260 from $300, noting that the guidance and organic revenue growth of the firm were “excellent” but there were concerns around 2022 membership growth.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Teladoc Health, Inc., up from 42 in the previous quarter worth $3.3 billion.
Workday, Inc., Analog Devices, Inc., and Bausch Health Companies Inc. are some of the best stocks to buy right now, along with Teladoc Health, Inc..
In its Q4 2020 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE:TDOC) was one of them. Here is what the fund said:
“Teladoc Health offers remote physician access to patients at home. After experiencing incredible levels of growth throughout the early stages of the pandemic as its unique value proposition rose to the forefront of the healthcare industry, the firm’s shares cooled off a bit as optimistic vaccine data slightly curtailed investor expectations for the firm’s future growth potential. We sold the stock.”
5. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 44
StoneCo Ltd. (NASDAQ:STNE) is ranked fifth on our list of 10 stocks better than AMC according to hedge funds. The company operates as a financial technology solutions provider and is headquartered in the Cayman Islands.
On September 3, investment advisory HSBC maintained a Buy rating on StoneCo Ltd. stock but lowered the price target to $65 from $85. Neha Agarwala, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in StoneCo Ltd., up from 39 in the previous quarter worth $2.1 billion.
In its Q2 2021 investor letter, JDP Capital Management, an asset management firm, highlighted a few stocks and StoneCo Ltd. (NASDAQ: STNE) was one of them. Here is what the fund said:
“StoneCo has been in our portfolio since early 2019 and has appreciated 225% since. In the first half of 2021 the stock was down nearly 20% and was a drag on the fund’s performance.
Stone is a leading fintec company in Brazil that provides back-office software, loans and other financial services to small and medium sized businesses (SMBs). We have discussed Stone in past letters and the company’s “ladder up” from a card processor to a supplier of enterprise software used to sell financial products on top of such as working capital loans.
The company generates a lot of cash that it reinvests to acquire or build new financial products for its customer base. Since we invested, the company has grown the number of SMB clients by 3x, revenue by 2.3x, and net income by 2.2×11.
The pandemic’s impact on SMBs in Brazil has been severe, especially for the many retailers who are only now adopting an e-commerce strategy. In the first half of 2021 Stone increased loss provisions on its lending product, and overall growth has slowed somewhat. The stock’s decline earlier this year was not surprising, but investors are now ignoring progress that has enhanced Stone’s position for coming out much stronger when the recovery begins.
StoneCo Q1 2021 Earnings Call: “Based on (i) our learnings with lockdowns last year, (ii) recent client transactional data and (iii) learnings from the dynamics of countries where vaccines are widespread, we expect that once vaccination scale (which we think will happen in the second half of 2021), the economic recovery will be fast and – although delayed – Brazil is moving in the right direction. For these reasons, we have made an informed decision to be ready for recovery by investing in growth…”
“…In the first quarter, we decided to increase our salesforce headcount by 24%, marketing investments by 33%, customer service and logistics headcount by 32% and technology headcount by 20% in order to be the fastest player when our economy comes back to normal levels.”
“I want to start our presentation by highlighting that Brazil went through a second wave of COVID in the first quarter of ’21, which imposed commerce restrictions in several cities throughout the country. Those restrictions were felt by our clients with average TVP reaching a low in the end of March…
…But similar to the behavior we saw in the comeback from the first lockdown in 2020, we already observed significant and quick recovery with average TPV in May achieving levels above January 2021. As Thiago mentioned, we expect that once vaccinations are scaled, the economy recovery of the country will be fast.”
In terms of COVID recovery opportunities within our portfolio, Stone might be the most “coiled” because the impact on Brazilian small businesses has been so traumatic. In addition, Stone is part of a much larger and fast-moving transition happening in Brazil around the digitalization of financial services. The speed of this transition is unique to Brazil because the Central Bank is actively trying to reduce the country’s previous dependency on a small handful of large banks. Important progress in the first half of 2021 included closing on the long-awaited acquisition of Linx, a mature provider of enterprise software with a large footprint across Brazil. The acquisition will provide Stone meaningful cross-selling opportunities and a more diversified customer base.”
4. Bausch Health Companies Inc. (NYSE:BHC)
Number of Hedge Fund Holders: 45
Bausch Health Companies Inc. is a Canada-based biotechnology company. It is placed fourth on our list of 10 stocks better than AMC according to hedge funds.
On September 21, investment advisory JPMorgan maintained an Overweight rating on Bausch Health Companies Inc. stock with a price target of $38, noting the shares had 50% upside based on recent growth estimates.
At the end of the second quarter of 2021, 45 hedge funds in the database of Insider Monkey held stakes worth $3.9 billion in Bausch Health Companies Inc., up from 42 in the preceding quarter worth $4 billion.
In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Bausch Health Companies Inc. (NYSE:BHC) was one of them. Here is what the fund said:
“Bausch Health Companies (BHC) climbed 55% during the period. Glenview (6% owner) sent a letter to the company in early February arguing the company has not acted to unlock shareholder value and urging the company to sell its eye care business. Shortly after, activist investor Carl Icahn disclosing a 7.83% stake in the company. The company responded to the filing saying that they remain committed to splitting the business into two parts, but are open to pursuing all opportunities. The company reported strong 4Q results with better-than-expected 2021 guidance. 4Q revenue came in at $2,213M slightly ahead of consensus of $2,165M and EPS of $1.34 beat consensus of $1.12. The company guided for 2021 revenue of $8.6-8.8B coming in ahead of expectations of $8.55B with EBITDA of $3.4-3.55B ahead of $3.46B estimated. The company announced the transition of Paul Herendeen to an advisory role to be succeeded by Sam Eldessouky, previously senior vice president, controller and chief accounting officer. Finally, the company announced the sale of Amoun Pharmaceutical for $740M, which was relatively in line with estimates and should help support debt reduction targets ahead of the planned spin-off of Bausch + Lomb eye care business.”
3. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 55
Oracle Corporation (NYSE:ORCL) is a Texas-based firm that markets enterprise software and related services. It is ranked third on our list of 10 stocks better than AMC according to hedge funds.
On September 14, investment advisory Monness Crespi reiterated a Buy rating on Oracle Corporation stock and raised the price target to $115 from $113, highlighting the “solid” outlook for the firm in the coming months based on guidance numbers.
At the end of the second quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in Oracle Corporation, up from 52 in the preceding quarter worth $2.8 billion.
Here is what Ariel Investments has to say about Oracle Corporation (NYSE:ORCL) in its Q1 2021 investor letter:
“A temporary factor might be a downturn in the high-yield bond market driving up LBO financing costs for the decline in 2021 GAAP revenue for Oracle Corporation (ORCL) due to a change in accounting methods. In all these examples, stock prices were driven well-below our calculations of intrinsic value. We invested in each company with good outcomes. Later, we will offer instances when this strategy is not successful.”
2. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 62
Analog Devices, Inc. is placed second on our list of 10 stocks better than AMC. The firm makes and sells semiconductors and is headquartered in Massachusetts.
On September 20, investment advisory JPMorgan upgraded Analog Devices, Inc. stock to Overweight from Neutral and raised the price target to $215 from $119, noting that semiconductor firms with solid market leadership were poised for strong growth.
At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $5.7 billion in Analog Devices, Inc., up from 50 the preceding quarter worth $4.8 billion.
In its Q4 2020 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Analog Devices, Inc. (NASDAQ:ADI) was one of them. Here is what the fund said:
”Analog Devices benefited from several global, long-wave trends such as automation, electric vehicles and the 5G network build-out. The company’s quarterly sales into the auto, industrial and communications sectors exceeded expectations, giving the stock a lift.”
1. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 72
Workday, Inc. is ranked first on our list of 10 stocks better than AMC according to hedge funds. The company markets enterprise cloud applications and is headquartered in California.
On September 20, investment advisory Wells Fargo initiated coverage of Workday, Inc. stock with an Overweight rating and a price target of $320, appreciating the second quarter earnings results of the company.
At the end of the second quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $5.18 billion in Workday, Inc., up from 69 in the previous quarter worth $5.17 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Workday, Inc. (NASDAQ:WDAY) was one of them. Here is what the fund said:
“In addition to the new issue market, we have been tactically adding growth exposure. We took advantage of the selloff in disruptors that comprise a large portion of the portfolio to initiate a position in enterprise software maker Workday.”
You can also take a peek at 10 Cheap Small-Cap Stocks to Buy and 10 Penny Stocks with Upcoming Growth Catalysts.
Follow Insider Monkey on Twitter
Suggested Articles:
- 25 Largest ETFs by Assets Under Management
- 10 Cheap Space Stocks Popular On Reddit
- Crypto Bull Steve Cohen is Buying These 10 Stocks
This article is originally published at Insider Monkey.
