Do Hedge Funds Love AssetMark Financial Holdings, Inc. (AMK)?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards AssetMark Financial Holdings, Inc. (NYSE:AMK).

AssetMark Financial Holdings, Inc. (NYSE:AMK) has experienced an increase in hedge fund sentiment in recent months. Our calculations also showed that AMK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Managemnet

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the fresh hedge fund action encompassing AssetMark Financial Holdings, Inc. (NYSE:AMK).

What does smart money think about AssetMark Financial Holdings, Inc. (NYSE:AMK)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in AMK a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in AssetMark Financial Holdings, Inc. (NYSE:AMK) was held by Azora Capital, which reported holding $14.6 million worth of stock at the end of September. It was followed by Adage Capital Management with a $13.5 million position. Other investors bullish on the company included Millennium Management, Balyasny Asset Management, and Samlyn Capital. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to AssetMark Financial Holdings, Inc. (NYSE:AMK), around 3.22% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to AMK.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Azora Capital, managed by Ravi Chopra, assembled the most outsized position in AssetMark Financial Holdings, Inc. (NYSE:AMK). Azora Capital had $14.6 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $13.5 million position during the quarter. The other funds with brand new AMK positions are Israel Englander’s Millennium Management, Dmitry Balyasny’s Balyasny Asset Management, and Robert Pohly’s Samlyn Capital.

Let’s now review hedge fund activity in other stocks similar to AssetMark Financial Holdings, Inc. (NYSE:AMK). These stocks are Great Western Bancorp Inc (NYSE:GWB), National Vision Holdings, Inc. (NASDAQ:EYE), Colony Credit Real Estate, Inc. (NYSE:CLNC), and Minerals Technologies Inc (NYSE:MTX). This group of stocks’ market valuations are closest to AMK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GWB 11 46049 2
EYE 22 344437 1
CLNC 6 13571 -2
MTX 17 107111 2
Average 14 127792 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $45 million in AMK’s case. National Vision Holdings, Inc. (NASDAQ:EYE) is the most popular stock in this table. On the other hand Colony Credit Real Estate, Inc. (NYSE:CLNC) is the least popular one with only 6 bullish hedge fund positions. AssetMark Financial Holdings, Inc. (NYSE:AMK) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AMK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AMK investors were disappointed as the stock returned -3.9% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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