Ameriprise Financial, Inc. (AMP): Hedge Fund Sentiment Unchanged

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Ameriprise Financial, Inc. (NYSE:AMP)? The smart money sentiment can provide an answer to this question.

Hedge fund interest in Ameriprise Financial, Inc. (NYSE:AMP) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AMP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare AMP to other stocks including EPAM Systems Inc (NYSE:EPAM), Best Buy Co., Inc. (NYSE:BBY), and Equity Residential (NYSE:EQR) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ole Andreas Halvorsen Viking Global

Ole Andreas Halvorsen of Viking Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the recent hedge fund action surrounding Ameriprise Financial, Inc. (NYSE:AMP).

Do Hedge Funds Think AMP Is A Good Stock To Buy Now?

At second quarter’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in AMP over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management has the most valuable position in Ameriprise Financial, Inc. (NYSE:AMP), worth close to $436.6 million, comprising 5.3% of its total 13F portfolio. On Lyrical Asset Management’s heels is Viking Global, managed by Andreas Halvorsen, which holds a $383.2 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Dmitry Balyasny’s Balyasny Asset Management, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Lyrical Asset Management allocated the biggest weight to Ameriprise Financial, Inc. (NYSE:AMP), around 5.29% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, dishing out 1.74 percent of its 13F equity portfolio to AMP.

Since Ameriprise Financial, Inc. (NYSE:AMP) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few fund managers who sold off their full holdings heading into Q3. Interestingly, Benjamin A. Smith’s Laurion Capital Management sold off the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $10.9 million in stock, and Peter Seuss’s Prana Capital Management was right behind this move, as the fund sold off about $6.1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ameriprise Financial, Inc. (NYSE:AMP) but similarly valued. We will take a look at EPAM Systems Inc (NYSE:EPAM), Best Buy Co., Inc. (NYSE:BBY), Equity Residential (NYSE:EQR), CBRE Group, Inc. (NYSE:CBRE), Energy Transfer L.P. (NYSE:ET), Nucor Corporation (NYSE:NUE), and Seagen Inc. (NASDAQ:SGEN). This group of stocks’ market values are similar to AMP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EPAM 33 522910 9
BBY 27 984205 -6
EQR 31 521478 8
CBRE 37 2648713 7
ET 29 835292 4
NUE 32 196463 7
SGEN 37 8709980 -2
Average 32.3 2059863 3.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $2060 million. That figure was $1192 million in AMP’s case. CBRE Group, Inc. (NYSE:CBRE) is the most popular stock in this table. On the other hand Best Buy Co., Inc. (NYSE:BBY) is the least popular one with only 27 bullish hedge fund positions. Ameriprise Financial, Inc. (NYSE:AMP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMP is 83.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on AMP as the stock returned 11.9% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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