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Hedge Funds Have Never Been This Bullish On American Finance Trust, Inc. (AFIN)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of American Finance Trust, Inc. (NASDAQ:AFIN) based on that data and determine whether they were really smart about the stock.

American Finance Trust, Inc. (NASDAQ:AFIN) was in 10 hedge funds’ portfolios at the end of March. AFIN has seen an increase in activity from the world’s largest hedge funds lately. There were 8 hedge funds in our database with AFIN holdings at the end of the previous quarter. Our calculations also showed that AFIN 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.

In the financial world there are tons of indicators shareholders employ to size up their stock investments. A pair of the most under-the-radar indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the S&P 500 by a healthy margin (see the details here).

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the key hedge fund action surrounding American Finance Trust, Inc. (NASDAQ:AFIN).

How are hedge funds trading American Finance Trust, Inc. (NASDAQ:AFIN)?

At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in AFIN a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in American Finance Trust, Inc. (NASDAQ:AFIN), which was worth $3.6 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $3.3 million worth of shares. Millennium Management, Citadel Investment Group, and Tudor Investment Corp were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to American Finance Trust, Inc. (NASDAQ:AFIN), around 0.04% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to AFIN.

As aggregate interest increased, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most valuable position in American Finance Trust, Inc. (NASDAQ:AFIN). Millennium Management had $3.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new AFIN investors: Donald Sussman’s Paloma Partners and Noam Gottesman’s GLG Partners.

Let’s now take a look at hedge fund activity in other stocks similar to American Finance Trust, Inc. (NASDAQ:AFIN). We will take a look at First Bancorp (NASDAQ:FBNC), BellRing Brands, Inc. (NYSE:BRBR), Patrick Industries, Inc. (NASDAQ:PATK), and Upland Software Inc (NASDAQ:UPLD). This group of stocks’ market values are similar to AFIN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FBNC 13 42593 -1
BRBR 15 135847 -1
PATK 13 50010 -5
UPLD 17 143956 -5
Average 14.5 93102 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $13 million in AFIN’s case. Upland Software Inc (NASDAQ:UPLD) is the most popular stock in this table. On the other hand First Bancorp (NASDAQ:FBNC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks American Finance Trust, Inc. (NASDAQ:AFIN) is even less popular than FBNC. Hedge funds clearly dropped the ball on AFIN 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on AFIN as the stock returned 30.8% 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.