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Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Alithya Group inc. (NASDAQ:ALYA) from the perspective of those elite funds.
Is Alithya Group inc. (NASDAQ:ALYA) a buy, sell, or hold? Money managers are becoming less confident. The number of bullish hedge fund bets decreased by 1 recently. Our calculations also showed that ALYA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ALYA was in 5 hedge funds' portfolios at the end of the third quarter of 2019. There were 6 hedge funds in our database with ALYA positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are viewed as slow, outdated investment tools of the past. While there are greater than 8000 funds trading at the moment, Our experts choose to focus on the masters of this group, around 750 funds. These hedge fund managers control the lion's share of the smart money's total capital, and by following their highest performing equity investments, Insider Monkey has found a number of investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
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Mario Gabelli of GAMCO Investors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's view the key hedge fund action encompassing Alithya Group inc. (NASDAQ:ALYA).
Hedge fund activity in Alithya Group inc. (NASDAQ:ALYA)
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALYA over the last 17 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 Alithya Group inc. (NASDAQ:ALYA) was held by Ancora Advisors, which reported holding $5.3 million worth of stock at the end of September. It was followed by Ariel Investments with a $4 million position. Other investors bullish on the company included GAMCO Investors, Renaissance Technologies, and Millennium Management. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Alithya Group inc. (NASDAQ:ALYA), around 0.23% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to ALYA.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Roumell Asset Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified ALYA as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Alithya Group inc. (NASDAQ:ALYA) but similarly valued. These stocks are Aspen Aerogels Inc (NYSE:ASPN), Chimerix Inc (NASDAQ:CMRX), Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL), and Ocular Therapeutix Inc (NASDAQ:OCUL). This group of stocks' market valuations are closest to ALYA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASPN,6,17246,2 CMRX,11,25753,0 PANL,2,145,-1 OCUL,4,14426,-1 Average,5.75,14393,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $15 million in ALYA's case. Chimerix Inc (NASDAQ:CMRX) is the most popular stock in this table. On the other hand Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) is the least popular one with only 2 bullish hedge fund positions. Alithya Group inc. (NASDAQ:ALYA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ALYA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ALYA investors were disappointed as the stock returned -24% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.