Is Artisan Partners Asset Management Inc (APAM) Going To Burn These Hedge Funds?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Artisan Partners Asset Management Inc (NYSE:APAM) was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. APAM has experienced a decrease in enthusiasm from smart money recently. There were 11 hedge funds in our database with APAM positions at the end of the previous quarter. At the end of this article we will also compare APAM to other stocks including Suburban Propane Partners LP (NYSE:SPH), United Natural Foods, Inc. (NASDAQ:UNFI), and YY Inc (ADR) (NASDAQ:YY) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Artisan Partners Asset Management Inc (NYSE:APAM)?

Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards APAM over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, led by Ken Fisher, holds the number one position in Artisan Partners Asset Management Inc (NYSE:APAM). Fisher Asset Management has a $51.2 million position in the stock. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, holding a $24.4 million position. Other hedge funds and institutional investors that are bullish include Renaissance Technologies, one of the largest hedge funds in the world, Eric Sprott’s Sprott Asset Management and Dmitry Balyasny’s Balyasny Asset Management. We should note that Sprott Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. At the top of the heap, Matthew Tewksbury’s Stevens Capital Management dropped the biggest position of the “upper crust” of funds studied by Insider Monkey, worth an estimated $0.6 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $0.1 million worth of shares.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Artisan Partners Asset Management Inc (NYSE:APAM) but similarly valued. These stocks are Suburban Propane Partners LP (NYSE:SPH), United Natural Foods, Inc. (NASDAQ:UNFI), YY Inc (ADR) (NASDAQ:YY), and Cardtronics, Inc. (NASDAQ:CATM). This group of stocks’ market caps are similar to APAM’s market cap.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $95 million in APAM’s case. YY Inc (ADR) (NASDAQ:YY) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 4 bullish hedge fund positions. Artisan Partners Asset Management Inc (NYSE:APAM) 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 YY might be a better candidate to consider taking a long position in.

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Disclosure: None