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Is AB A Good Stock To Buy Now?

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Abigail Fisher
·6 min read
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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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards AllianceBernstein Holding LP (NYSE:AB).

Is AB a good stock to buy now? AllianceBernstein Holding LP (NYSE:AB) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. AB investors should be aware of an increase in activity from the world's largest hedge funds lately. There were 7 hedge funds in our database with AB positions at the end of the second quarter. Our calculations also showed that AB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

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

According to most traders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are more than 8000 funds in operation today, Our experts hone in on the upper echelon of this group, approximately 850 funds. These investment experts manage the lion's share of the hedge fund industry's total asset base, and by tailing their finest stock picks, Insider Monkey has identified several investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Mario Gabelli of GAMCO Investors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind let's go over the new hedge fund action encompassing AllianceBernstein Holding LP (NYSE:AB).

What have hedge funds been doing with AllianceBernstein Holding LP (NYSE:AB)?

Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AB over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in AllianceBernstein Holding LP (NYSE:AB) was held by Arrowstreet Capital, which reported holding $17.4 million worth of stock at the end of September. It was followed by Royce & Associates with a $8.1 million position. Other investors bullish on the company included Citadel Investment Group, PEAK6 Capital Management, and GAMCO Investors. In terms of the portfolio weights assigned to each position Dorset Management allocated the biggest weight to AllianceBernstein Holding LP (NYSE:AB), around 0.8% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to AB.

Now, specific money managers have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, created the largest position in AllianceBernstein Holding LP (NYSE:AB). PEAK6 Capital Management had $2.3 million invested in the company at the end of the quarter.

Let's now take a look at hedge fund activity in other stocks similar to AllianceBernstein Holding LP (NYSE:AB). We will take a look at New Jersey Resources Corp (NYSE:NJR), STAAR Surgical Company (NASDAQ:STAA), WD-40 Company (NASDAQ:WDFC), Sunnova Energy International Inc. (NYSE:NOVA), Tenet Healthcare Corp (NYSE:THC), ShockWave Medical, Inc. (NASDAQ:SWAV), and Nu Skin Enterprises, Inc. (NYSE:NUS). All of these stocks' market caps are similar to AB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NJR,12,32097,-2 STAA,13,827132,-7 WDFC,17,163003,2 NOVA,23,422856,13 THC,33,791683,5 SWAV,16,135654,4 NUS,22,315274,-3 Average,19.4,383957,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $33 million in AB's case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks AllianceBernstein Holding LP (NYSE:AB) is even less popular than NJR. Our overall hedge fund sentiment score for AB is 24.5. 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. Hedge funds clearly dropped the ball on AB as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on AB as the stock returned 25.4% since Q3 (through December 2nd) and outperformed the market by an even larger margin.

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

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