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Is Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) 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.
Is Altisource Portfolio Solutions (ASPS)a good stock to buy now? Prominent investors were taking a pessimistic view. The number of bullish hedge fund bets decreased by 2 in recent months. Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 17. Our calculations also showed that ASPS 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 8 hedge funds in our database with ASPS positions at the end of the second quarter.
Video: 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 S&P 500 ETFs by more than 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 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 stocks that are in our short portfolio.
Minhua Zhang of Weld 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. With all of this in mind let's take a glance at the latest hedge fund action encompassing Altisource Portfolio Solutions S.A. (NASDAQ:ASPS).
What does smart money think about Altisource Portfolio Solutions S.A. (NASDAQ:ASPS)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. By comparison, 10 hedge funds held shares or bullish call options in ASPS a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies has the largest position in Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), worth close to $9.3 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Ken Griffin's Citadel Investment Group, Ken Griffin's Citadel Investment Group and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), around 0.06% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to ASPS.
Because Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) has experienced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies who sold off their positions entirely in the third quarter. Interestingly, John Overdeck and David Siegel's Two Sigma Advisors sold off the biggest position of the "upper crust" of funds followed by Insider Monkey, worth close to $0.5 million in stock, and Nick Thakore's Diametric Capital was right behind this move, as the fund sold off about $0.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Altisource Portfolio Solutions S.A. (NASDAQ:ASPS). We will take a look at Plymouth Industrial REIT, Inc. (NYSE:PLYM), Baytex Energy Corp (NYSE:BTE), Tortoise Energy Infrastructure Corporation (NYSE:TYG), Farmland Partners Inc (NYSE:FPI), Vista Oil & Gas, S.A.B. de C.V. (NYSE:VIST), Aduro BioTech Inc (NASDAQ:ADRO), and Uranium Energy Corp. (NYSE:UEC). This group of stocks' market values are closest to ASPS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLYM,14,35524,7 BTE,9,7132,3 TYG,2,1839,1 FPI,8,5154,0 VIST,9,31931,4 ADRO,9,36124,-2 UEC,3,3598,-1 Average,7.7,17329,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.7 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $11 million in ASPS's case. Plymouth Industrial REIT, Inc. (NYSE:PLYM) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 2 bullish hedge fund positions. Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ASPS is 30.3. 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 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 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 surpassed the market again by 16.1 percentage points. Unfortunately ASPS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ASPS investors were disappointed as the stock returned 3% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.