Is AMC A Good Stock To Buy According To Hedge Funds?

Is AMC Entertainment Holdings Inc (NYSE:AMC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is AMC a good stock to buy now? AMC Entertainment Holdings Inc (NYSE:AMC) shareholders have witnessed an increase in hedge fund interest in recent months. AMC Entertainment Holdings Inc (NYSE:AMC) was in 12 hedge funds’ portfolios at the end of September. The all time high for this statistics is 31. There were 8 hedge funds in our database with AMC positions at the end of the second quarter. Our calculations also showed that AMC 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

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 15 best blue chip stocks 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 we’re going to review the recent hedge fund action regarding AMC Entertainment Holdings Inc (NYSE:AMC).

Do Hedge Funds Think AMC Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the second quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in AMC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AMC A Good Stock To Buy?

The largest stake in AMC Entertainment Holdings Inc (NYSE:AMC) was held by D E Shaw, which reported holding $3.7 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $1.7 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position JS Capital allocated the biggest weight to AMC Entertainment Holdings Inc (NYSE:AMC), around 0.02% of its 13F portfolio. Antara Capital is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to AMC.

Now, some big names were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, initiated the most valuable position in AMC Entertainment Holdings Inc (NYSE:AMC). D E Shaw had $3.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Jonathan Soros’s JS Capital, and William B. Gray’s Orbis Investment Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AMC Entertainment Holdings Inc (NYSE:AMC) but similarly valued. We will take a look at Banco BBVA Argentina S.A. (NYSE:BBAR), Clovis Oncology Inc (NASDAQ:CLVS), Nautilus, Inc. (NYSE:NLS), Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), Front Yard Residential Corporation (NYSE:RESI), Flexion Therapeutics Inc (NASDAQ:FLXN), and Globalstar, Inc. (PINK:GSAT). This group of stocks’ market caps match AMC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBAR 3 2782 -5
CLVS 15 69500 -3
NLS 17 86762 5
LOMA 9 37079 -2
RESI 20 56519 -5
FLXN 17 121644 2
GSAT 11 49117 2
Average 13.1 60486 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $8 million in AMC’s case. Front Yard Residential Corporation (NYSE:RESI) is the most popular stock in this table. On the other hand Banco BBVA Argentina S.A. (NYSE:BBAR) is the least popular one with only 3 bullish hedge fund positions. AMC Entertainment Holdings Inc (NYSE:AMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMC is 47.1. 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. 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 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 surpassed the market again by 16.2 percentage points. Unfortunately AMC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AMC investors were disappointed as the stock returned -15.5% since the end of September (through 12/8) 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 most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.