Is Allied Motion Technologies, Inc. (NASDAQ:AMOT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Allied Motion Technologies, Inc. (NASDAQ:AMOT) shares was flat at the end of last quarter. This is usually a negative indicator. 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 GenMark Diagnostics, Inc (NASDAQ:GNMK), Metropolitan Bank Holding Corp. (NYSE:MCB), and NACCO Industries, Inc. (NYSE:NC) to gather more data points. Our calculations also showed that AMOT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We're going to go over the key hedge fund action regarding Allied Motion Technologies, Inc. (NASDAQ:AMOT).
How have hedgies been trading Allied Motion Technologies, Inc. (NASDAQ:AMOT)?
At Q2's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in AMOT over the last 16 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Allied Motion Technologies, Inc. (NASDAQ:AMOT), worth close to $11 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is G2 Investment Partners Management, managed by Josh Goldberg, which holds a $4.4 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Richard S. Meisenberg's ACK Asset Management, Israel Englander's Millennium Management and Noam Gottesman's GLG Partners.
Judging by the fact that Allied Motion Technologies, Inc. (NASDAQ:AMOT) has faced a decline in interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of hedge funds that slashed their entire stakes in the second quarter. Intriguingly, Louis Navellier's Navellier & Associates cut the largest stake of all the hedgies monitored by Insider Monkey, valued at about $0.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund said goodbye to about $0.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Allied Motion Technologies, Inc. (NASDAQ:AMOT) but similarly valued. These stocks are GenMark Diagnostics, Inc (NASDAQ:GNMK), Metropolitan Bank Holding Corp. (NYSE:MCB), NACCO Industries, Inc. (NYSE:NC), and resTORbio, Inc. (NASDAQ:TORC). This group of stocks' market valuations are similar to AMOT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNMK,14,74719,0 MCB,6,62855,-2 NC,9,17991,0 TORC,3,60634,-3 Average,8,54050,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $28 million in AMOT's case. GenMark Diagnostics, Inc (NASDAQ:GNMK) is the most popular stock in this table. On the other hand resTORbio, Inc. (NASDAQ:TORC) is the least popular one with only 3 bullish hedge fund positions. Allied Motion Technologies, Inc. (NASDAQ:AMOT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AMOT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AMOT were disappointed as the stock returned -6.8% during the third 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.