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Alpha Pro Tech, Ltd. (APT) Fell Out Of Favor With Hedge Funds

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Alpha Pro Tech, Ltd. (NYSE:APT).

Is Alpha Pro Tech, Ltd. (NYSE:APT) a first-rate investment now? Money managers were taking a bearish view. The number of bullish hedge fund bets decreased by 2 in recent months. Alpha Pro Tech, Ltd. (NYSE:APT) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 8. Our calculations also showed that APT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 8 hedge funds in our database with APT holdings at the end of December.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

AQR CAPITAL MANAGEMENT
AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

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. With all of this in mind we're going to take a look at the key hedge fund action surrounding Alpha Pro Tech, Ltd. (NYSE:APT).

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

At first quarter's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in APT a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the number one position in Alpha Pro Tech, Ltd. (NYSE:APT). Renaissance Technologies has a $4.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $1.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Ken Griffin's Citadel Investment Group, Ken Griffin's Citadel Investment Group and Peter Muller's PDT Partners. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Alpha Pro Tech, Ltd. (NYSE:APT), around 0.02% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to APT.

Due to the fact that Alpha Pro Tech, Ltd. (NYSE:APT) has witnessed bearish sentiment from hedge fund managers, we can see that there is a sect of fund managers that slashed their full holdings in the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the largest stake of all the hedgies watched by Insider Monkey, totaling about $3.5 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund cut about $1.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the first quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Alpha Pro Tech, Ltd. (NYSE:APT) but similarly valued. We will take a look at Zovio Inc. (NASDAQ:ZVO), Natuzzi, S.p.A (NYSE:NTZ), Zosano Pharma Corp (NASDAQ:ZSAN), Vince Holding Corp (NYSE:VNCE), Acme United Corporation (NYSE:ACU), Ultralife Corp. (NASDAQ:ULBI), and Lantronix Inc (NASDAQ:LTRX). This group of stocks' market valuations are closest to APT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZVO,9,27987,-2 NTZ,2,285,2 ZSAN,1,199,-2 VNCE,1,2442,0 ACU,2,12552,0 ULBI,4,3531,0 LTRX,2,5515,-3 Average,3,7502,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $7 million in APT's case. Zovio Inc. (NASDAQ:ZVO) is the most popular stock in this table. On the other hand Zosano Pharma Corp (NASDAQ:ZSAN) is the least popular one with only 1 bullish hedge fund positions. Alpha Pro Tech, Ltd. (NYSE:APT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APT is 56.8. 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. 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 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 beat the market again by 4.8 percentage points. Unfortunately APT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on APT were disappointed as the stock returned -14.1% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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