Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards APi Group Corporation (NYSE:APG) to find out whether there were any major changes in hedge funds’ views.
APi Group Corporation (NYSE:APG) shareholders have witnessed an increase in hedge fund interest in recent months. APi Group Corporation (NYSE:APG) was in 33 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that APG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the latest hedge fund action surrounding APi Group Corporation (NYSE:APG).
Do Hedge Funds Think APG Is A Good Stock To Buy Now?
At the end of March, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in APG over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in APi Group Corporation (NYSE:APG) was held by Viking Global, which reported holding $689.3 million worth of stock at the end of December. It was followed by Senator Investment Group with a $124.1 million position. Other investors bullish on the company included Permian Investment Partners, Empyrean Capital Partners, and ADW Capital. In terms of the portfolio weights assigned to each position ADW Capital allocated the biggest weight to APi Group Corporation (NYSE:APG), around 21.69% of its 13F portfolio. North Peak Capital is also relatively very bullish on the stock, earmarking 14.38 percent of its 13F equity portfolio to APG.
As industrywide interest jumped, some big names have been driving this bullishness. Hawk Ridge Management, managed by David Brown, initiated the most valuable position in APi Group Corporation (NYSE:APG). Hawk Ridge Management had $5.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Pigott’s Fort Baker Capital Management, Mikal Patel’s Oribel Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks similar to APi Group Corporation (NYSE:APG). These stocks are Jamf Holding Corp. (NASDAQ:JAMF), Artisan Partners Asset Management Inc (NYSE:APAM), Community Bank System, Inc. (NYSE:CBU), Parsons Corporation (NYSE:PSN), Premier Inc (NASDAQ:PINC), American Well Corporation (NYSE:AMWL), and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). This group of stocks’ market valuations are similar to APG’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $696 million. That figure was $1370 million in APG’s case. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is the most popular stock in this table. On the other hand Community Bank System, Inc. (NYSE:CBU) is the least popular one with only 8 bullish hedge fund positions. APi Group Corporation (NYSE:APG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APG is 87. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately APG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on APG were disappointed as the stock returned 4.3% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.