The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards AMC Networks Inc (NASDAQ:AMCX), and what that likely means for the prospects of the company and its stock.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to review the key hedge fund action encompassing AMC Networks Inc (NASDAQ:AMCX).
Hedge fund activity in AMC Networks Inc (NASDAQ:AMCX)
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMCX over the last 13 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Omega Advisors was the largest shareholder of AMC Networks Inc (NASDAQ:AMCX), with a stake worth $164.6 million reported as of the end of September. Trailing Omega Advisors was GAMCO Investors, which amassed a stake valued at $62.1 million. Horizon Asset Management, Millennium Management, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers were breaking ground themselves. Impax Asset Management, managed by Ian Simm, created the most valuable position in AMC Networks Inc (NASDAQ:AMCX). Impax Asset Management had $11.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, D. E. Shaw’s D E Shaw, and Phil Frohlich’s Prescott Group Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AMC Networks Inc (NASDAQ:AMCX) but similarly valued. We will take a look at Louisiana-Pacific Corporation (NYSE:LPX), Tetra Tech, Inc. (NASDAQ:TTEK), Churchill Downs Incorporated (NASDAQ:CHDN), and Cleveland-Cliffs Inc (NYSE:CLF). All of these stocks’ market caps resemble AMCX’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 24 hedge funds with bullish positions and the average amount invested in these stocks was $357 million. That figure was $314 million in AMCX’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Tetra Tech, Inc. (NASDAQ:TTEK) is the least popular one with only 17 bullish hedge fund positions. AMC Networks Inc (NASDAQ:AMCX) 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. In this regard LPX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.