Does Amtrust Financial Services, Inc. (AFSI) Deserve a Place in Your Portfolio?

Because Amtrust Financial Services, Inc. (NASDAQ:AFSI) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there were a few funds who sold off their entire stakes heading into Q4. At the top of the heap, James Dinan’s York Capital Management sold off the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling about $103.2 million in stock, and D E Shaw was right behind this move, as the fund said goodbye to about $1.2 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Amtrust Financial Services, Inc. (NASDAQ:AFSI) but similarly valued. We will take a look at Sirona Dental Systems, Inc. (NASDAQ:SIRO), ITC Holdings Corp. (NYSE:ITC), Forest City Enterprises, Inc. (NYSE:FCE.A), and Old Dominion Freight Line (NASDAQ:ODFL). This group of stocks’ market values resemble AFSI’s market value.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $727 million. That figure was $109 million in AFSI’s case. Forest City Enterprises, Inc. (NYSE:FCE.A) is the most popular stock in this table. On the other hand ITC Holdings Corp. (NYSE:ITC) is the least popular one with only 16 bullish hedge fund positions. Amtrust Financial Services, Inc. (NASDAQ:AFSI) 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. In this regard FCE might be a better candidate to consider a long position in.