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Is AGM A Good Stock To Buy Now?

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Abigail Fisher
·6 min read
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In this article we will analyze whether Federal Agricultural Mortgage Corp. (NYSE:AGM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is AGM a good stock to buy now? Federal Agricultural Mortgage Corp. (NYSE:AGM) has experienced an increase in activity from the world's largest hedge funds lately. Federal Agricultural Mortgage Corp. (NYSE:AGM) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 8 hedge funds in our database with AGM holdings at the end of June. Our calculations also showed that AGM 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.

In today’s marketplace there are a large number of signals market participants use to assess stocks. A duo of the best signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outclass their index-focused peers by a solid margin (see the details here).

Cruiser Capital Advisors' Returns, AUM and Holdings
Cruiser Capital Advisors' Returns, AUM and Holdings

Keith Rosenbloom of Cruiser Capital Advisors

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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 we're going to take a glance at the latest hedge fund action surrounding Federal Agricultural Mortgage Corp. (NYSE:AGM).

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

At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AGM over the last 21 quarters. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Federal Agricultural Mortgage Corp. (NYSE:AGM), which was worth $8.1 million at the end of the third quarter. On the second spot was Cruiser Capital Advisors which amassed $1.1 million worth of shares. Millennium Management, AQR Capital Management, and Citadel Investment Group 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 Cruiser Capital Advisors allocated the biggest weight to Federal Agricultural Mortgage Corp. (NYSE:AGM), around 1% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to AGM.

Consequently, key hedge funds were leading the bulls' herd. Millennium Management, managed by Israel Englander, assembled the most outsized position in Federal Agricultural Mortgage Corp. (NYSE:AGM). Millennium Management had $1 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $0.2 million position during the quarter. The only other fund with a brand new AGM position is Matthew Hulsizer's PEAK6 Capital Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Federal Agricultural Mortgage Corp. (NYSE:AGM) but similarly valued. These stocks are Hollysys Automation Technologies Ltd (NASDAQ:HOLI), IES Holdings, Inc. (NASDAQ:IESC), UP Fintech Holding Limited (NASDAQ:TIGR), Quotient Technology Inc (NYSE:QUOT), Eastman Kodak Co. (NYSE:KODK), Immatics N.V. (NASDAQ:IMTX), and Himax Technologies, Inc. (NASDAQ:HIMX). All of these stocks' market caps resemble AGM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HOLI,13,75165,3 IESC,9,412002,1 TIGR,6,5195,2 QUOT,15,304245,2 KODK,15,53830,12 IMTX,22,161638,22 HIMX,6,42466,-3 Average,12.3,150649,5.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $14 million in AGM's case. Immatics N.V. (NASDAQ:IMTX) is the most popular stock in this table. On the other hand UP Fintech Holding Limited (NASDAQ:TIGR) is the least popular one with only 6 bullish hedge fund positions. Federal Agricultural Mortgage Corp. (NYSE:AGM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AGM is 53.6. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on AGM as the stock returned 16% since the end of the third quarter (through 12/8) 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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