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Is Alico, Inc. (ALCO) A Good Stock To Buy?

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·5 min read
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  • ALCO

In this article we will analyze whether Alico, Inc. (NASDAQ:ALCO) 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 ALCO a good stock to buy? Alico, Inc. (NASDAQ:ALCO) investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. Alico, Inc. (NASDAQ:ALCO) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that ALCO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Rogers’ Top 10 Stock Picks
John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a look at the recent hedge fund action regarding Alico, Inc. (NASDAQ:ALCO).

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

Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in ALCO a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Birch Run Capital was the largest shareholder of Alico, Inc. (NASDAQ:ALCO), with a stake worth $3.9 million reported as of the end of March. Trailing Birch Run Capital was Renaissance Technologies, which amassed a stake valued at $3.5 million. Arrowstreet Capital, Ariel Investments, 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 Birch Run Capital allocated the biggest weight to Alico, Inc. (NASDAQ:ALCO), around 1.49% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to ALCO.

Judging by the fact that Alico, Inc. (NASDAQ:ALCO) has faced a decline in interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers who sold off their entire stakes last quarter. At the top of the heap, Raymond J. Harbert's Harbert Management dropped the biggest investment of the "upper crust" of funds watched by Insider Monkey, valued at about $3.5 million in stock. Martin Whitman's fund, Third Avenue Management, also said goodbye to its stock, about $1.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Alico, Inc. (NASDAQ:ALCO) but similarly valued. These stocks are Applied Optoelectronics Inc (NASDAQ:AAOI), Lakeland Industries, Inc. (NASDAQ:LAKE), CTI Biopharma Corp. (NASDAQ:CTIC), StoneMor Inc. (NYSE:STON), Inotiv, Inc. (NASDAQ:NOTV), IMV Inc. (NASDAQ:IMV), and Republic First Bancorp, Inc. (NASDAQ:FRBK). This group of stocks' market caps match ALCO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AAOI,7,8856,-2 LAKE,10,28721,-2 CTIC,14,70094,-2 STON,6,157543,0 NOTV,9,28205,6 IMV,2,1007,-2 FRBK,6,6040,0 Average,7.7,42924,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.7 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $11 million in ALCO's case. CTI Biopharma Corp. (NASDAQ:CTIC) is the most popular stock in this table. On the other hand IMV Inc. (NASDAQ:IMV) is the least popular one with only 2 bullish hedge fund positions. Alico, Inc. (NASDAQ:ALCO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALCO is 40.7. 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 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on ALCO as the stock returned 19.8% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.

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