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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Alta Equipment Group Inc. (NYSE:ALTG) in this article.
Is ALTG a good stock to buy now? Prominent investors were cutting their exposure. The number of bullish hedge fund bets went down by 3 lately. Alta Equipment Group Inc. (NYSE:ALTG) was in 13 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. Our calculations also showed that ALTG 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). There were 16 hedge funds in our database with ALTG holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Wil Harkey of Nantahala Capital Management
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 15 best blue chip stocks 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. 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 website. Keeping this in mind let's check out the recent hedge fund action encompassing Alta Equipment Group Inc. (NYSE:ALTG).
Do Hedge Funds Think ALTG Is A Good Stock To Buy Now?
At Q3's end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALTG over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in Alta Equipment Group Inc. (NYSE:ALTG). Millennium Management has a $20.8 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Wilmot B. Harkey and Daniel Mack of Nantahala Capital Management, with a $19.1 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain George McCabe's Portolan Capital Management, Travis Cocke's Voss Capital and Steve Pigott's Fort Baker Capital Management. In terms of the portfolio weights assigned to each position Proxima Capital Management allocated the biggest weight to Alta Equipment Group Inc. (NYSE:ALTG), around 1.36% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, dishing out 0.99 percent of its 13F equity portfolio to ALTG.
Because Alta Equipment Group Inc. (NYSE:ALTG) has faced declining sentiment from the smart money, we can see that there were a few hedgies that elected to cut their positions entirely heading into Q4. Interestingly, Steven Clark's Omni Partners dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at close to $2.4 million in stock. Jeffrey Altman's fund, Owl Creek Asset Management, also dropped its stock, about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Alta Equipment Group Inc. (NYSE:ALTG) but similarly valued. We will take a look at Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA), CyberOptics Corporation (NASDAQ:CYBE), Pioneer Bancorp, Inc. (NASDAQ:PBFS), The First Bancorp, Inc. (NASDAQ:FNLC), Landmark Infrastructure Partners LP (NASDAQ:LMRK), Movado Group, Inc (NYSE:MOV), and SC Health Corporation (NYSE:SCPE). This group of stocks' market valuations are closest to ALTG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LTRPA,20,32328,-2 CYBE,9,19886,0 PBFS,2,2164,-1 FNLC,1,3771,0 LMRK,2,671,1 MOV,20,15927,2 SCPE,15,75596,1 Average,9.9,21478,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $36 million in ALTG's case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand The First Bancorp, Inc. (NASDAQ:FNLC) is the least popular one with only 1 bullish hedge fund positions. Alta Equipment Group Inc. (NYSE:ALTG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALTG is 53.1. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ALTG as the stock returned 18.3% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.