It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. 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 Apergy Corporation (NYSE:APY).
Apergy Corporation (NYSE:APY) investors should pay attention to an increase in hedge fund interest recently. Our calculations also showed that APY isn’t among the 30 most popular stocks among hedge funds.
According to most investors, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are over 8,000 funds trading at the moment, Our experts look at the aristocrats of this group, around 700 funds. These money managers handle bulk of the smart money’s total capital, and by keeping an eye on their highest performing investments, Insider Monkey has come up with various investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by 6 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to review the recent hedge fund action regarding Apergy Corporation (NYSE:APY).
Hedge fund activity in Apergy Corporation (NYSE:APY)
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards APY over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, East Side Capital (RR Partners) held the most valuable stake in Apergy Corporation (NYSE:APY), which was worth $94.8 million at the end of the third quarter. On the second spot was Laurion Capital Management which amassed $14.9 million worth of shares. Moreover, Cardinal Capital, BeaconLight Capital, and D E Shaw were also bullish on Apergy Corporation (NYSE:APY), allocating a large percentage of their portfolios to this stock.
Now, key money managers have jumped into Apergy Corporation (NYSE:APY) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Apergy Corporation (NYSE:APY). Citadel Investment Group had $8.4 million invested in the company at the end of the quarter. Vince Maddi and Shawn Brennan’s SIR Capital Management also initiated a $7.4 million position during the quarter. The following funds were also among the new APY investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Paul Tudor Jones’s Tudor Investment Corp, and Noam Gottesman’s GLG Partners.
Let’s now review hedge fund activity in other stocks similar to Apergy Corporation (NYSE:APY). We will take a look at Cathay General Bancorp (NASDAQ:CATY), Copa Holdings, S.A. (NYSE:CPA), Tribune Media Company (NYSE:TRCO), and GreenSky, Inc. (NASDAQ:GSKY). All of these stocks’ market caps are closest to APY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CATY | 13 | 63406 | -1 |
| CPA | 19 | 281020 | -2 |
| TRCO | 39 | 1292684 | 7 |
| GSKY | 20 | 187344 | -5 |
| Average | 22.75 | 456114 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $456 million. That figure was $182 million in APY’s case. Tribune Media Company (NYSE:TRCO) is the most popular stock in this table. On the other hand Cathay General Bancorp (NASDAQ:CATY) is the least popular one with only 13 bullish hedge fund positions. Apergy Corporation (NYSE:APY) 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 TRCO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.