AMC Entertainment Holdings Inc (AMC): Are Hedge Funds Right About This Stock?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

AMC Entertainment Holdings Inc (NYSE:AMC) was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. AMC has seen a decrease in activity from the world’s largest hedge funds of late. There were 16 hedge funds in our database with AMC holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Choice Hotels International, Inc. (NYSE:CHH), Integrated Device Technology, Inc. (NASDAQ:IDTI), and Medidata Solutions Inc (NASDAQ:MDSO) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about AMC Entertainment Holdings Inc (NYSE:AMC)?

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a 6% dip from the second quarter of 2016. There were a total of 16 hedge funds with a bullish position in AMC at the beginning of this year, which has remained largely flat all year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Driehaus Capital, led by Richard Driehaus, holds the most valuable position in AMC Entertainment Holdings Inc (NYSE:AMC). Driehaus Capital has a $63.7 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund manager is Israel Englander’s Millennium Management, with a $21 million position. Remaining peers with similar optimism comprise Jim Simons’ Renaissance Technologies, Michael Barnes and Arif Inayatullah’s Tricadia Capital Management, and Mark Broach’s Manatuck Hill Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as AMC Entertainment Holdings Inc (NYSE:AMC) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few funds that decided to sell off their positions entirely heading into Q4. Intriguingly, Martin D. Sass’ MD Sass got rid of the biggest stake of the 700 funds tracked by Insider Monkey, totaling about $3.8 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $2 million worth of shares.

Let’s check out hedge fund activity in other stocks similar to AMC Entertainment Holdings Inc (NYSE:AMC). We will take a look at Choice Hotels International, Inc. (NYSE:CHH), Integrated Device Technology, Inc. (NASDAQ:IDTI), Medidata Solutions Inc (NASDAQ:MDSO), and Penske Automotive Group, Inc. (NYSE:PAG). This group of stocks’ market caps resemble AMC’s market cap.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $134 million in AMC’s case. Integrated Device Technology, Inc. (NASDAQ:IDTI) is the most popular stock in this table. On the other hand Penske Automotive Group, Inc. (NYSE:PAG) is the least popular one with only 12 bullish hedge fund positions. AMC Entertainment Holdings Inc (NYSE:AMC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IDTI might be a better candidate to consider taking a long position in.

Disclosure: None