After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards PlayAGS, Inc. (NYSE:AGS).
Is PlayAGS, Inc. (NYSE:AGS) a cheap investment right now? Prominent investors were becoming less hopeful. The number of bullish hedge fund bets decreased by 2 in recent months. PlayAGS, Inc. (NYSE:AGS) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 22. Our calculations also showed that AGS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Parag Vora of HG Vora Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s check out the fresh hedge fund action regarding PlayAGS, Inc. (NYSE:AGS).
Do Hedge Funds Think AGS Is A Good Stock To Buy Now?
At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in AGS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, HG Vora Capital Management was the largest shareholder of PlayAGS, Inc. (NYSE:AGS), with a stake worth $12.4 million reported as of the end of September. Trailing HG Vora Capital Management was Renaissance Technologies, which amassed a stake valued at $3.9 million. Arrowstreet Capital, Two Sigma Advisors, and Brigade Capital 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 HG Vora Capital Management allocated the biggest weight to PlayAGS, Inc. (NYSE:AGS), around 0.93% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to AGS.
Because PlayAGS, Inc. (NYSE:AGS) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers that decided to sell off their positions entirely in the third quarter. Intriguingly, Cliff Asness’s AQR Capital Management dropped the largest investment of all the hedgies monitored by Insider Monkey, valued at close to $0.7 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund said goodbye to about $0.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PlayAGS, Inc. (NYSE:AGS) but similarly valued. These stocks are Diana Shipping Inc. (NYSE:DSX), vTv Therapeutics Inc (NASDAQ:VTVT), Olympic Steel, Inc. (NASDAQ:ZEUS), Applied Genetic Technologies Corp (NASDAQ:AGTC), Protalix BioTherapeutics Inc. (NYSE:PLX), Barnes & Noble Education Inc (NYSE:BNED), and Citizens Holding Company (NASDAQ:CIZN). This group of stocks’ market valuations resemble AGS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DSX | 7 | 19056 | 0 |
| VTVT | 4 | 2795 | 1 |
| ZEUS | 5 | 3338 | -1 |
| AGTC | 11 | 25666 | 3 |
| PLX | 3 | 11491 | -1 |
| BNED | 11 | 13375 | -1 |
| CIZN | 1 | 787 | 0 |
| Average | 6 | 10930 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $22 million in AGS’s case. Applied Genetic Technologies Corp (NASDAQ:AGTC) is the most popular stock in this table. On the other hand Citizens Holding Company (NASDAQ:CIZN) is the least popular one with only 1 bullish hedge fund positions. PlayAGS, Inc. (NYSE:AGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AGS is 68. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on AGS as the stock returned 50.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
