We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Aphria Inc. (NYSE:APHA) is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Aphria Inc. (NYSE:APHA) has seen an increase in support from the world’s most elite money managers of late. APHA was in 9 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 6 hedge funds in our database with APHA positions at the end of the previous quarter. Our calculations also showed that APHA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
William Harnisch of Peconic Partners LLC
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the key hedge fund action encompassing Aphria Inc. (NYSE:APHA).
Hedge fund activity in Aphria Inc. (NYSE:APHA)
At Q4’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards APHA over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the number one position in Aphria Inc. (NYSE:APHA). Renaissance Technologies has a $7.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $3.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Edmond M. Safra’s EMS Capital, and William Harnisch’s Peconic Partners LLC. In terms of the portfolio weights assigned to each position Peconic Partners LLC allocated the biggest weight to Aphria Inc. (NYSE:APHA), around 0.27% of its 13F portfolio. EMS Capital is also relatively very bullish on the stock, setting aside 0.19 percent of its 13F equity portfolio to APHA.
As aggregate interest increased, key money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most outsized position in Aphria Inc. (NYSE:APHA). Two Sigma Advisors had $3.6 million invested in the company at the end of the quarter. William Harnisch’s Peconic Partners LLC also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new APHA investors: D. E. Shaw’s D E Shaw, Philip Hempleman’s Ardsley Partners, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aphria Inc. (NYSE:APHA) but similarly valued. We will take a look at SunPower Corporation (NASDAQ:SPWR), Conduent Incorporated (NYSE:CNDT), Brookline Bancorp, Inc. (NASDAQ:BRKL), and Canadian Solar Inc. (NASDAQ:CSIQ). This group of stocks’ market values resemble APHA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPWR | 15 | 54412 | -2 |
| CNDT | 26 | 421360 | -6 |
| BRKL | 11 | 66496 | 0 |
| CSIQ | 14 | 148220 | -4 |
| Average | 16.5 | 172622 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $17 million in APHA’s case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand Brookline Bancorp, Inc. (NASDAQ:BRKL) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Aphria Inc. (NYSE:APHA) is even less popular than BRKL. Hedge funds dodged a bullet by taking a bearish stance towards APHA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately APHA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); APHA investors were disappointed as the stock returned -35.1% during the same time period 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 most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
