AmTrust Financial Services Inc. (NASDAQ:AFSI) on April 11 plummeted 22.15% with more than 15 million shares traded to $14.72 as of 2:26 p.m., following a report from the Wall Street Journal that revealed secret recordings that may prove useful into SEC’s investigation on the company’s defamed accounting practices.
The report said, the FBI and SEC engaged with an auditor of accounting firm BDO USA LLP, to snitch around BDO’s offices, casually asking associates about AmTrust’s practices. The whistleblower walked around with a recorder disguised as a Starbucks gift card.
The whistleblower reportedly audited AmTrust Financial Services Inc. (NASDAQ:AFSI) for 3 years while with BDO USA. The whistleblower claimed that AmTrust regularly relied on adjustments that were not supported by documents to complete financial schedules.
AmTrust broke into a new 52-week low today, from its previous record of $16.58.
What Does The Smart Money Sentiment Say?
The Smart Money Sentiment remained intact quarter over quarter, with only 1 hedge fund losing its position in shares. As of the fourth quarter of 2016, we saw 21 funds holding shares of the company valued at $187 million, compared to 22 funds holding shares valued at $210 million in the third quarter of the same year.
While the Smart Money remains steadfast towards AmTrust Financial Services Inc. (NASDAQ:AFSI), Matthew Iorio of White Elm Capital dropped 13% of its position on the company from the third quarter of 2016 vs the fourth quarter of the same year. Iorio currently owns over 1.85 million shares, which is valued at $50.75 million.
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 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).
The Bottom Line
Traders are shedding off AmTrust Financial Services Inc. (NASDAQ:AFSI) following secret recordings that probe into the company’s defamed accounting practices. While the Smart Money pool kept their positions, White Elm Capital dropped 13% off its position in the company. For further reading, here are top 10 accounting scandals of all time.
