We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards AMC Networks Inc (NASDAQ:AMCX) and determine whether hedge funds skillfully traded this stock.
AMC Networks Inc (NASDAQ:AMCX) investors should be aware of an increase in hedge fund interest of late. AMC Networks Inc (NASDAQ:AMCX) was in 26 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 35. Our calculations also showed that AMCX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a lot of methods investors use to assess publicly traded companies. Two of the most under-the-radar methods are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top fund managers can trounce their index-focused peers by a very impressive amount (see the details here).
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we’re going to review the key hedge fund action encompassing AMC Networks Inc (NASDAQ:AMCX).
What have hedge funds been doing with AMC Networks Inc (NASDAQ:AMCX)?
At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the first quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in AMCX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in AMC Networks Inc (NASDAQ:AMCX), which was worth $45.5 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $19.9 million worth of shares. Omega Advisors, Contrarius Investment Management, and Millennium Management 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 Omega Advisors allocated the biggest weight to AMC Networks Inc (NASDAQ:AMCX), around 1.7% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, earmarking 1.06 percent of its 13F equity portfolio to AMCX.
Consequently, key hedge funds have been driving this bullishness. Contrarius Investment Management, managed by Stephen Mildenhall, established the most valuable position in AMC Networks Inc (NASDAQ:AMCX). Contrarius Investment Management had $11.2 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker’s Woodline Partners also made a $5.3 million investment in the stock during the quarter. The other funds with brand new AMCX positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Gelband’s ExodusPoint Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to AMC Networks Inc (NASDAQ:AMCX). These stocks are Alamo Group, Inc. (NYSE:ALG), AdaptHealth Corp. (NASDAQ:AHCO), PC Connection, Inc. (NASDAQ:CNXN), Nantkwest Inc (NASDAQ:NK), Gol Linhas Aereas Inteligentes SA (NYSE:GOL), Argo Group International Holdings, Ltd. (NYSE:ARGO), and BP Midstream Partners LP (NYSE:BPMP). This group of stocks’ market valuations are similar to AMCX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALG | 10 | 157672 | 2 |
| AHCO | 12 | 97877 | 2 |
| CNXN | 8 | 42874 | -2 |
| NK | 8 | 11774 | 4 |
| GOL | 10 | 37485 | -1 |
| ARGO | 17 | 183970 | 1 |
| BPMP | 3 | 7045 | -2 |
| Average | 9.7 | 76957 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $127 million in AMCX’s case. Argo Group International Holdings, Ltd. (NYSE:ARGO) is the most popular stock in this table. On the other hand BP Midstream Partners LP (NYSE:BPMP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks AMC Networks Inc (NASDAQ:AMCX) is more popular among hedge funds. Our overall hedge fund sentiment score for AMCX is 80.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately AMCX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AMCX were disappointed as the stock returned 3.4% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
