The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Apollo Global Management LLC (NYSE:APO) and find out how it is affected by hedge funds’ moves.
Is Apollo Global Management LLC (NYSE:APO) a buy, sell, or hold? Prominent investors are becoming less hopeful. The number of long hedge fund bets was cut by 2 recently. APO was in 18 hedge funds’ portfolios at the end of the third quarter of 2015. There were 20 hedge funds in our database with APO holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as SS and C Technologies Holdings Inc (NASDAQ:SSNC), Qorvo Inc (NASDAQ:QRVO), and Hyatt Hotels Corporation (NYSE:H) to gather more data points.
According to most stock holders, hedge funds are perceived as underperforming, old investment vehicles of years past. While there are over 8000 funds trading at present, Our experts choose to focus on the top tier of this club, around 700 funds. These investment experts administer bulk of the hedge fund industry’s total capital, and by paying attention to their matchless stock picks, Insider Monkey has discovered a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, let’s review the recent action encompassing Apollo Global Management LLC (NYSE:APO).
Hedge fund activity in Apollo Global Management LLC (NYSE:APO)
Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Thomas E. Claugus’s GMT Capital has the largest position in Apollo Global Management LLC (NYSE:APO), worth close to $79.2 million, corresponding to 2% of its total 13F portfolio. The second largest stake is held by HMI Capital, managed by Mick Hellman, which holds a $45.3 million position; the fund has 14.2% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism encompass Jonathon Jacobson’s Highfields Capital Management, Jody LaNasa and Vivian Lau’s Serengeti Asset Management and Martin D. Sass’s MD Sass.
Judging by the fact that Apollo Global Management LLC (NYSE:APO) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers who were dropping their full holdings last quarter. At the top of the heap, Howard Marks’ Oaktree Capital Management said goodbye to the largest stake of all the hedgies watched by Insider Monkey, comprising about $22.2 million in stock. Tim Mullen’s fund, Swift Run Capital Management, also dumped its stock, about $1.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Apollo Global Management LLC (NYSE:APO) but similarly valued. We will take a look at SS and C Technologies Holdings Inc (NASDAQ:SSNC), Qorvo Inc (NASDAQ:QRVO), Hyatt Hotels Corporation (NYSE:H), and ONEOK, Inc. (NYSE:OKE). This group of stocks’ market valuations are similar to APO’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $465 million, higher than the $242 million in APO’s case. SS and C Technologies Holdings Inc (NASDAQ:SSNC) is the most popular stock in this table, while Hyatt Hotels Corporation (NYSE:H) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Apollo Global Management LLC (NYSE:APO) is even less popular than H. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.