Should I Avoid AMC Networks Inc (AMCX)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider AMC Networks Inc (NASDAQ:AMCX) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is AMC Networks Inc (NASDAQ:AMCX) ready to rally soon? Prominent investors were selling. The number of bullish hedge fund positions retreated by 3 lately. AMC Networks Inc (NASDAQ:AMCX) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic is 35. Our calculations also showed that AMCX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 22 hedge funds in our database with AMCX positions at the end of the first quarter.

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

Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMCX over the last 24 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, Contrarius Investment Management was the largest shareholder of AMC Networks Inc (NASDAQ:AMCX), with a stake worth $150.9 million reported as of the end of June. Trailing Contrarius Investment Management was GAMCO Investors, which amassed a stake valued at $27.1 million. Arrowstreet Capital, D E Shaw, and Horizon Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to AMC Networks Inc (NASDAQ:AMCX), around 7.34% of its 13F portfolio. Algert Global is also relatively very bullish on the stock, designating 0.39 percent of its 13F equity portfolio to AMCX.

Judging by the fact that AMC Networks Inc (NASDAQ:AMCX) has experienced falling interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds that elected to cut their full holdings by the end of the second quarter. At the top of the heap, Matthew Hulsizer’s PEAK6 Capital Management sold off the biggest investment of all the hedgies followed by Insider Monkey, totaling an estimated $1.2 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also dropped its stock, about $1.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to AMC Networks Inc (NASDAQ:AMCX). These stocks are BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Group 1 Automotive, Inc. (NYSE:GPI), Main Street Capital Corporation (NYSE:MAIN), Embraer SA (NYSE:ERJ), CVB Financial Corp. (NASDAQ:CVBF), and PriceSmart, Inc. (NASDAQ:PSMT). This group of stocks’ market valuations are similar to AMCX’s market valuation.

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As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $252 million in AMCX’s case. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 8 bullish hedge fund positions. AMC Networks Inc (NASDAQ:AMCX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMCX is 50.6. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately AMCX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AMCX were disappointed as the stock returned -35.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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