AssetMark Financial Holdings, Inc. (AMK): Are Hedge Funds Right About This Stock?

In this article you are going to find out whether hedge funds think AssetMark Financial Holdings, Inc. (NYSE:AMK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is AssetMark Financial Holdings, Inc. (NYSE:AMK) worth your attention right now? Prominent investors are getting less bullish. The number of bullish hedge fund bets dropped by 2 recently. Our calculations also showed that AMK isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

To the average investor there are numerous formulas market participants put to use to grade stocks. A couple of the best formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best money managers can outclass the broader indices by a superb margin (see the details here).

Phill Gross of Adage Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action encompassing AssetMark Financial Holdings, Inc. (NYSE:AMK).

What have hedge funds been doing with AssetMark Financial Holdings, Inc. (NYSE:AMK)?

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in AMK a year ago. So, let’s review 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, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in AssetMark Financial Holdings, Inc. (NYSE:AMK). Adage Capital Management has a $23 million position in the stock, comprising 0.1% of its 13F portfolio. On Adage Capital Management’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions encompass Dmitry Balyasny’s Balyasny Asset Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Adage Capital Management allocated the biggest weight to AssetMark Financial Holdings, Inc. (NYSE:AMK), around 0.07% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to AMK.

Since AssetMark Financial Holdings, Inc. (NYSE:AMK) has witnessed falling interest from the aggregate hedge fund industry, we can see that there were a few hedgies who sold off their entire stakes last quarter. It’s worth mentioning that Ravi Chopra’s Azora Capital said goodbye to the largest stake of the 750 funds followed by Insider Monkey, comprising close to $17.9 million in stock, and Ryan Caldwell’s Chiron Investment Management was right behind this move, as the fund dumped about $0.1 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AssetMark Financial Holdings, Inc. (NYSE:AMK) but similarly valued. We will take a look at Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), Ingevity Corporation (NYSE:NGVT), Insperity Inc (NYSE:NSP), and Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). All of these stocks’ market caps match AMK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KTOS 18 44967 2
NGVT 29 166562 2
NSP 29 154086 8
SBGI 25 178673 -8
Average 25.25 136072 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $25 million in AMK’s case. Ingevity Corporation (NYSE:NGVT) is the most popular stock in this table. On the other hand Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks AssetMark Financial Holdings, Inc. (NYSE:AMK) is even less popular than KTOS. Hedge funds clearly dropped the ball on AMK as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AMK as the stock returned 30.9% so far in the second quarter and outperformed the market by an even larger margin.

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