Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about Apollo Investment Corp. (NASDAQ:AINV).
Apollo Investment Corp. (NASDAQ:AINV) investors should pay attention to an increase in enthusiasm from smart money lately. AINV was in 15 hedge funds’ portfolios at the end of December. There were 8 hedge funds in our database with AINV holdings at the end of the previous quarter. Our calculations also showed that ainv isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the key hedge fund action encompassing Apollo Investment Corp. (NASDAQ:AINV).
What have hedge funds been doing with Apollo Investment Corp. (NASDAQ:AINV)?
At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 88% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in AINV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Apollo Investment Corp. (NASDAQ:AINV), with a stake worth $10.6 million reported as of the end of December. Trailing Citadel Investment Group was Gillson Capital, which amassed a stake valued at $3.3 million. Levin Capital Strategies, D E Shaw, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers have jumped into Apollo Investment Corp. (NASDAQ:AINV) headfirst. Gillson Capital, managed by Daniel Johnson, initiated the biggest position in Apollo Investment Corp. (NASDAQ:AINV). Gillson Capital had $3.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $1.1 million position during the quarter. The other funds with brand new AINV positions are Jonathan Auerbach’s Hound Partners, Israel Englander’s Millennium Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Apollo Investment Corp. (NASDAQ:AINV). These stocks are Middlesex Water Company (NASDAQ:MSEX), Boingo Wireless Inc (NASDAQ:WIFI), Carbonite Inc (NASDAQ:CARB), and ARMOUR Residential REIT, Inc. (NYSE:ARR). This group of stocks’ market values match AINV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSEX | 11 | 48580 | 2 |
| WIFI | 18 | 125999 | 1 |
| CARB | 16 | 108510 | -1 |
| ARR | 5 | 12194 | 2 |
| Average | 12.5 | 73821 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $30 million in AINV’s case. Boingo Wireless Inc (NASDAQ:WIFI) is the most popular stock in this table. On the other hand ARMOUR Residential REIT, Inc. (NYSE:ARR) is the least popular one with only 5 bullish hedge fund positions. Apollo Investment Corp. (NASDAQ:AINV) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on AINV as the stock returned 27.4% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
