The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards AMC Networks Inc (NASDAQ:AMCX).
AMC Networks Inc (NASDAQ:AMCX) has seen an increase in hedge fund interest lately. AMCX was in 22 hedge funds' portfolios at the end of the third quarter of 2019. There were 19 hedge funds in our database with AMCX positions at the end of the previous quarter. Our calculations also showed that AMCX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
[caption id="attachment_26283" align="aligncenter" width="460"] Leon Cooperman of Omega Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to analyze the key hedge fund action encompassing AMC Networks Inc (NASDAQ:AMCX).
How have hedgies been trading AMC Networks Inc (NASDAQ:AMCX)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the second quarter of 2019. By comparison, 21 hedge funds held shares or bullish call options in AMCX a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in AMC Networks Inc (NASDAQ:AMCX), which was worth $148.3 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $40.2 million worth of shares. Omega Advisors, Citadel Investment Group, and Horizon Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Omega Advisors allocated the biggest weight to AMC Networks Inc (NASDAQ:AMCX), around 1.29% of its 13F portfolio. AlphaOne Capital Partners is also relatively very bullish on the stock, designating 0.59 percent of its 13F equity portfolio to AMCX.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Weld Capital Management, managed by Minhua Zhang, assembled the largest position in AMC Networks Inc (NASDAQ:AMCX). Weld Capital Management had $0.9 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new AMCX investors: Ray Dalio's Bridgewater Associates, David E. Shaw's D E Shaw, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now review hedge fund activity in other stocks similar to AMC Networks Inc (NASDAQ:AMCX). We will take a look at American Eagle Outfitters Inc. (NYSE:AEO), Vonage Holdings Corp. (NYSE:VG), Main Street Capital Corporation (NYSE:MAIN), and SITE Centers Corp. (NYSE:SITC). This group of stocks' market values match AMCX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AEO,28,359428,7 VG,30,369454,-9 MAIN,4,13169,0 SITC,11,54558,-4 Average,18.25,199152,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $199 million. That figure was $276 million in AMCX's case. Vonage Holdings Corp. (NYSE:VG) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 4 bullish hedge fund positions. AMC Networks Inc (NASDAQ:AMCX) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AMCX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AMCX were disappointed as the stock returned -21.8% during the fourth quarter (through the end of November) 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.