At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not A. H. Belo Corporation (NYSE:AHC) makes for a good investment right now.
Is A. H. Belo Corporation (NYSE:AHC) a bargain? The smart money was taking a pessimistic view. The number of long hedge fund positions dropped by 1 recently. A. H. Belo Corporation (NYSE:AHC) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 5. Our calculations also showed that AHC 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). There were 5 hedge funds in our database with AHC holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 10 most profitable companies in the world 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 take a look at the fresh hedge fund action encompassing A. H. Belo Corporation (NYSE:AHC).
How are hedge funds trading A. H. Belo Corporation (NYSE:AHC)?
At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in AHC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in A. H. Belo Corporation (NYSE:AHC), worth close to $1.4 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Minerva Advisors, led by David P. Cohen, holding a $1.1 million position; 0.8% of its 13F portfolio is allocated to the company. Some other peers that are bullish consist of Mario Gabelli’s GAMCO Investors, Mark Kleiman’s Factorial Partners and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to A. H. Belo Corporation (NYSE:AHC), around 0.75% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 0.12 percent of its 13F equity portfolio to AHC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified AHC as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks similar to A. H. Belo Corporation (NYSE:AHC). These stocks are Flanigan’s Enterprises, Inc. (NYSE:BDL), Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), Taylor Devices, Inc. (NASDAQ:TAYD), U.S. Gold Corp. (NASDAQ:USAU), Kintara Therapeutics, Inc. (NASDAQ:KTRA), Unique Fabricating Inc (NYSE:UFAB), and Cellectar Biosciences, Inc. (NASDAQ:CLRB). This group of stocks’ market caps are similar to AHC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 1.9 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $3 million in AHC’s case. Bellicum Pharmaceuticals Inc (NASDAQ:BLCM) is the most popular stock in this table. On the other hand Flanigan’s Enterprises, Inc. (NYSE:BDL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks A. H. Belo Corporation (NYSE:AHC) is more popular among hedge funds. Our overall hedge fund sentiment score for AHC is 78. 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 30.7% in 2020 through November 27th and still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on AHC, though not to the same extent, as the stock returned 9.3% since the end of September (through November 27th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.