Was The Smart Money Right About Athene Holding Ltd. (ATH)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Athene Holding Ltd. (NYSE:ATH) in this article.

Is Athene Holding Ltd. (NYSE:ATH) a worthy investment now? Hedge funds were taking a bullish view. The number of long hedge fund bets advanced by 1 in recent months. Athene Holding Ltd. (NYSE:ATH) was in 33 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 50. Our calculations also showed that ATH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 32 hedge funds in our database with ATH holdings at the end of March.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Christian Leone of Luxor Capital Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 biggest insurance companies to identify fast growing companies in various industries. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s view the key hedge fund action regarding Athene Holding Ltd. (NYSE:ATH).

How are hedge funds trading Athene Holding Ltd. (NYSE:ATH)?

At second quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the first quarter of 2020. By comparison, 39 hedge funds held shares or bullish call options in ATH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Samlyn Capital, managed by Robert Pohly, holds the number one position in Athene Holding Ltd. (NYSE:ATH). Samlyn Capital has a $194.6 million position in the stock, comprising 3.6% of its 13F portfolio. Coming in second is Christian Leone of Luxor Capital Group, with a $90.3 million position; 2.3% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include Anthony Bozza’s Lakewood Capital Management, Ken Griffin’s Citadel Investment Group and Thomas E. Claugus’s GMT Capital. In terms of the portfolio weights assigned to each position OCO Capital Partners allocated the biggest weight to Athene Holding Ltd. (NYSE:ATH), around 32.09% of its 13F portfolio. Meru Capital is also relatively very bullish on the stock, designating 12.55 percent of its 13F equity portfolio to ATH.

Now, key hedge funds were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Athene Holding Ltd. (NYSE:ATH). Balyasny Asset Management had $17.6 million invested in the company at the end of the quarter. Clint Murray’s Lodge Hill Capital also made a $7.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel Johnson’s Gillson Capital, Jonathan Berger’s Birch Grove Capital, and Gregg Moskowitz’s Interval Partners.

Let’s now take a look at hedge fund activity in other stocks similar to Athene Holding Ltd. (NYSE:ATH). These stocks are Elbit Systems Ltd. (NASDAQ:ESLT), Robert Half International Inc. (NYSE:RHI), Reliance Steel & Aluminum Co. (NYSE:RS), Morningstar, Inc. (NASDAQ:MORN), Aegon N.V. (NYSE:AEG), CF Industries Holdings, Inc. (NYSE:CF), and AECOM (NYSE:ACM). This group of stocks’ market values match ATH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESLT 4 11024 -2
RHI 28 300880 2
RS 27 221183 4
MORN 20 292962 7
AEG 4 16423 0
CF 37 547941 3
ACM 38 664429 -1
Average 22.6 293549 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $294 million. That figure was $765 million in ATH’s case. AECOM (NYSE:ACM) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 4 bullish hedge fund positions. Athene Holding Ltd. (NYSE:ATH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATH is 68.4. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately ATH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ATH were disappointed as the stock returned 2.9% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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