Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Alaska Communications Systems Group Inc (NASDAQ:ALSK)? The smart money sentiment can provide an answer to this question.
Is ALSK a good stock to buy now? Hedge funds were getting more optimistic. The number of long hedge fund positions inched up by 3 lately. Alaska Communications Systems Group Inc (NASDAQ:ALSK) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ALSK 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.
If you’d ask most market participants, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers look at the aristocrats of this group, around 850 funds. These money managers oversee the majority of all hedge funds’ total capital, and by following their first-class investments, Insider Monkey has come up with many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Now we’re going to take a gander at the latest hedge fund action surrounding Alaska Communications Systems Group Inc (NASDAQ:ALSK).
Do Hedge Funds Think ALSK Is A Good Stock To Buy Now?
At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in ALSK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Alaska Communications Systems Group Inc (NASDAQ:ALSK) was held by Renaissance Technologies, which reported holding $7.4 million worth of stock at the end of September. It was followed by Ancora Advisors with a $0.3 million position. Other investors bullish on the company included Arrowstreet Capital, Zebra Capital Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Alaska Communications Systems Group Inc (NASDAQ:ALSK), around 0.29% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to ALSK.
Now, key money managers have jumped into Alaska Communications Systems Group Inc (NASDAQ:ALSK) headfirst. Zebra Capital Management, managed by Roger Ibbotson, established the biggest position in Alaska Communications Systems Group Inc (NASDAQ:ALSK). Zebra Capital Management had $0.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0 million position during the quarter. The only other fund with a new position in the stock is Chuck Royce’s Royce & Associates.
Let’s go over hedge fund activity in other stocks similar to Alaska Communications Systems Group Inc (NASDAQ:ALSK). These stocks are BankFinancial Corporation (NASDAQ:BFIN), Reading International Inc (NASDAQ:RDIB), Reading International, Inc. (NASDAQ:RDI), SPI Energy Co., Ltd. (NASDAQ:SPI), Key Tronic Corporation (NASDAQ:KTCC), Eloxx Pharmaceuticals, Inc. (NASDAQ:ELOX), and PC Tel Inc (NASDAQ:PCTI). All of these stocks’ market caps are similar to ALSK’s market cap.
|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 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $8 million in ALSK’s case. PC Tel Inc (NASDAQ:PCTI) is the most popular stock in this table. On the other hand Reading International Inc (NASDAQ:RDIB) is the least popular one with only 1 bullish hedge fund positions. Alaska Communications Systems Group Inc (NASDAQ:ALSK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALSK is 88. 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 ALSK as the stock returned 90.5% 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.