Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Alithya Group inc. (NASDAQ:ALYA) changed recently.
Alithya Group inc. (NASDAQ:ALYA) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of September. 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 for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Auburn National Bancorporation, Inc. (NASDAQ:AUBN), First Savings Financial Group, Inc. (NASDAQ:FSFG), and SharpSpring, Inc. (NASDAQ:SHSP) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora 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 10 most profitable companies in the world 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. With all of this in mind we're going to take a glance at the recent hedge fund action encompassing Alithya Group inc. (NASDAQ:ALYA).
Hedge fund activity in Alithya Group inc. (NASDAQ:ALYA)
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ALYA over the last 21 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ancora Advisors, managed by Frederick DiSanto, holds the number one position in Alithya Group inc. (NASDAQ:ALYA). Ancora Advisors has a $4.2 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, managed by Mario Gabelli, which holds a $2.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Renaissance Technologies, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Alithya Group inc. (NASDAQ:ALYA), around 0.17% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to ALYA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
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 Auburn National Bancorporation, Inc. (NASDAQ:AUBN), First Savings Financial Group, Inc. (NASDAQ:FSFG), SharpSpring, Inc. (NASDAQ:SHSP), Airgain, Inc. (NASDAQ:AIRG), Zovio Inc. (NASDAQ:ZVO), AgroFresh Solutions Inc (NASDAQ:AGFS), and MMA Capital Holdings Inc. (NASDAQ:MMAC). All of these stocks' market caps are closest to ALYA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AUBN,1,234,0 FSFG,3,4412,0 SHSP,7,32391,-3 AIRG,8,11258,-2 ZVO,10,32482,2 AGFS,3,1438,-1 MMAC,3,4082,0 Average,5,12328,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $8 million in ALYA's case. Zovio Inc. (NASDAQ:ZVO) is the most popular stock in this table. On the other hand Auburn National Bancorporation, Inc. (NASDAQ:AUBN) is the least popular one with only 1 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. Our overall hedge fund sentiment score for ALYA is 41.7. 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 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 30.7% in 2020 through November 27th and beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on ALYA, though not to the same extent, as the stock returned 9% since the end of Q3 (through November 27th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
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