We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Akazoo S.A. (NASDAQ:SONG).
Akazoo S.A. (NASDAQ:SONG) was in 4 hedge funds’ portfolios at the end of September. SONG has seen a decrease in hedge fund sentiment of late. There were 6 hedge funds in our database with SONG positions at the end of the previous quarter. Our calculations also showed that SONG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s go over the latest hedge fund action regarding Akazoo S.A. (NASDAQ:SONG).
What have hedge funds been doing with Akazoo S.A. (NASDAQ:SONG)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SONG over the last 17 quarters. So, let’s review 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, Mark Kingdon’s Kingdon Capital has the biggest position in Akazoo S.A. (NASDAQ:SONG), worth close to $2 million, corresponding to 0.2% of its total 13F portfolio. On Kingdon Capital’s heels is Michael Platt and William Reeves of BlueCrest Capital Mgmt., with a $1.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Ari Zweiman’s 683 Capital Partners, Jeffrey Altman’s Owl Creek Asset Management and . In terms of the portfolio weights assigned to each position Kingdon Capital allocated the biggest weight to Akazoo S.A. (NASDAQ:SONG), around 0.24% of its 13F portfolio. BlueCrest Capital Mgmt. is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to SONG.
Due to the fact that Akazoo S.A. (NASDAQ:SONG) has witnessed falling interest from the smart money, it’s safe to say that there were a few funds that decided to sell off their entire stakes in the third quarter. At the top of the heap, Paul Glazer’s Glazer Capital sold off the largest stake of the “upper crust” of funds monitored by Insider Monkey, valued at close to $3 million in stock. Phillip Goldstein, Andrew Dakos and Steven Samuels’s fund, Bulldog Investors, also dumped its stock, about $0.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Akazoo S.A. (NASDAQ:SONG) but similarly valued. These stocks are Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Prothena Corporation plc (NASDAQ:PRTA), Golden Star Resources Ltd. (NYSE:GSS), and Natural Resource Partners LP (NYSE:NRP). This group of stocks’ market values resemble SONG’s market value.
|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 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $5 million in SONG’s case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (NYSE:GSS) is the least popular one with only 3 bullish hedge fund positions. Akazoo S.A. (NASDAQ:SONG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SONG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SONG investors were disappointed as the stock returned -1.3% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.