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2019 Review: Most Favored Hedge Fund Stocks vs. Ameriprise Financial, Inc. (AMP)

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards Ameriprise Financial, Inc. (NYSE:AMP).

Ameriprise Financial, Inc. (NYSE:AMP) shareholders have witnessed a decrease in enthusiasm from smart money recently. Our calculations also showed that AMP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

MOORE GLOBAL INVESTMENTS

Louis Bacon Moore of Moore Capital

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind let’s take a glance at the new hedge fund action regarding Ameriprise Financial, Inc. (NYSE:AMP).

How have hedgies been trading Ameriprise Financial, Inc. (NYSE:AMP)?

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the second quarter of 2019. On the other hand, there were a total of 33 hedge funds with a bullish position in AMP a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

More specifically, Lyrical Asset Management was the largest shareholder of Ameriprise Financial, Inc. (NYSE:AMP), with a stake worth $328 million reported as of the end of September. Trailing Lyrical Asset Management was GLG Partners, which amassed a stake valued at $260.7 million. AQR Capital Management, Arrowstreet Capital, and Moore Global Investments were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lyrical Asset Management allocated the biggest weight to Ameriprise Financial, Inc. (NYSE:AMP), around 4.94% of its 13F portfolio. Moore Global Investments is also relatively very bullish on the stock, setting aside 1.61 percent of its 13F equity portfolio to AMP.

Since Ameriprise Financial, Inc. (NYSE:AMP) has witnessed falling interest from hedge fund managers, we can see that there is a sect of hedge funds who were dropping their full holdings by the end of the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dropped the biggest stake of the 750 funds followed by Insider Monkey, valued at about $155.4 million in stock, and Ravi Chopra’s Azora Capital was right behind this move, as the fund sold off about $29.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 12 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Ameriprise Financial, Inc. (NYSE:AMP). These stocks are The Clorox Company (NYSE:CLX), Cincinnati Financial Corporation (NASDAQ:CINF), CGI Inc. (NYSE:GIB), and Liberty Broadband Corporation (NASDAQ:LBRDK). All of these stocks’ market caps resemble AMP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLX 32 1004826 4
CINF 23 565077 5
GIB 14 300448 0
LBRDK 40 3494094 0
Average 27.25 1341111 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $1341 million. That figure was $1105 million in AMP’s case. Liberty Broadband Corporation (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 14 bullish hedge fund positions. Ameriprise Financial, Inc. (NYSE:AMP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on AMP as the stock returned 64.7% in 2019 through December 23rd and outperformed the market by an even larger margin.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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