While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding AllianceBernstein Holding LP (NYSE:AB).
AllianceBernstein Holding LP (NYSE:AB) was in 7 hedge funds’ portfolios at the end of December. AB shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. There were 6 hedge funds in our database with AB positions at the end of the previous quarter. Our calculations also showed that ab 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.
Let’s take a look at the key hedge fund action encompassing AllianceBernstein Holding LP (NYSE:AB).
How are hedge funds trading AllianceBernstein Holding LP (NYSE:AB)?
Heading into the first quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AB over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the number one position in AllianceBernstein Holding LP (NYSE:AB), worth close to $10.6 million, accounting for 0.1% of its total 13F portfolio. The second most bullish fund manager is GAMCO Investors, led by Mario Gabelli, holding a $3.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions consist of Robert B. Gillam’s McKinley Capital Management, David M. Knott’s Dorset Management and Matthew Hulsizer’s PEAK6 Capital Management.
As aggregate interest increased, specific money managers were breaking ground themselves. Chiron Investment Management, managed by Ryan Caldwell, assembled the most outsized position in AllianceBernstein Holding LP (NYSE:AB). Chiron Investment Management had $0.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.1 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks similar to AllianceBernstein Holding LP (NYSE:AB). These stocks are LiveRamp Holdings, Inc. (NYSE:RAMP), Kennedy-Wilson Holdings Inc (NYSE:KW), Liberty Latin America Ltd. (NASDAQ:LILA), and Ardagh Group S.A. (NYSE:ARD). This group of stocks’ market valuations match AB’s market valuation.
|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 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $18 million in AB’s case. LiveRamp Holdings, Inc. (NYSE:RAMP) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks AllianceBernstein Holding LP (NYSE:AB) is even less popular than ARD. Hedge funds dodged a bullet by taking a bearish stance towards AB. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AB wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); AB investors were disappointed as the stock returned 11.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.