Hedge Funds Are Buying Alico, Inc. (ALCO)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Alico, Inc. (NASDAQ:ALCO).

Alico, Inc. (NASDAQ:ALCO) was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. ALCO has seen an increase in hedge fund interest lately. There were 5 hedge funds in our database with ALCO holdings at the end of the previous quarter. Our calculations also showed that ALCO 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.

In the financial world there are many signals stock market investors have at their disposal to analyze stocks. A duo of the most useful signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace their index-focused peers by a significant amount (see the details here).

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s go over the new hedge fund action surrounding Alico, Inc. (NASDAQ:ALCO).

What have hedge funds been doing with Alico, Inc. (NASDAQ:ALCO)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in ALCO a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Daniel Beltzman and Gergory Smith’s Birch Run Capital has the number one position in Alico, Inc. (NASDAQ:ALCO), worth close to $5.5 million, comprising 1.7% of its total 13F portfolio. The second largest stake is held by GMT Capital, led by Thomas E. Claugus, holding a $4.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish comprise Martin Whitman’s Third Avenue Management, Renaissance Technologies and Murray Stahl’s Horizon Asset Management. In terms of the portfolio weights assigned to each position Birch Run Capital allocated the biggest weight to Alico, Inc. (NASDAQ:ALCO), around 1.65% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 0.43 percent of its 13F equity portfolio to ALCO.

Consequently, some big names have been driving this bullishness. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, created the largest position in Alico, Inc. (NASDAQ:ALCO). Springbok Capital had $0 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks similar to Alico, Inc. (NASDAQ:ALCO). These stocks are Albireo Pharma, Inc. (NASDAQ:ALBO), Sify Technologies Limited (NASDAQ:SIFY), Ocwen Financial Corporation (NYSE:OCN), and Hooker Furniture Corporation (NASDAQ:HOFT). This group of stocks’ market values are closest to ALCO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALBO 11 54443 -1
SIFY 1 746 -1
OCN 10 31580 0
HOFT 10 46096 4
Average 8 33216 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $19 million in ALCO’s case. Albireo Pharma, Inc. (NASDAQ:ALBO) is the most popular stock in this table. On the other hand Sify Technologies Limited (NASDAQ:SIFY) is the least popular one with only 1 bullish hedge fund positions. Alico, Inc. (NASDAQ:ALCO) 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 ALCO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ALCO investors were disappointed as the stock returned -0.5% 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.