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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. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider American Well Corporation (NYSE:AMWL) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is AMWL a good stock to buy? American Well Corporation (NYSE:AMWL) shareholders have witnessed an increase in support from the world's most elite money managers recently. American Well Corporation (NYSE:AMWL) was in 20 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 25. Our calculations also showed that AMWL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
James E. Flynn of Deerfield Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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. Keeping this in mind we're going to take a look at the key hedge fund action surrounding American Well Corporation (NYSE:AMWL).
Do Hedge Funds Think AMWL Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in AMWL a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, VGI Partners held the most valuable stake in American Well Corporation (NYSE:AMWL), which was worth $28.5 million at the end of the second quarter. On the second spot was Islet Management which amassed $17.5 million worth of shares. Bridger Management, Deerfield Management, and Alyeska Investment Group 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 VGI Partners allocated the biggest weight to American Well Corporation (NYSE:AMWL), around 2.26% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, designating 1.62 percent of its 13F equity portfolio to AMWL.
As aggregate interest increased, key hedge funds were breaking ground themselves. Bridgewater Associates, managed by Ray Dalio, initiated the most valuable position in American Well Corporation (NYSE:AMWL). Bridgewater Associates had $5.4 million invested in the company at the end of the quarter. Zach Schreiber's Point State Capital also initiated a $3.1 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel's Two Sigma Advisors, D. E. Shaw's D E Shaw, and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as American Well Corporation (NYSE:AMWL) but similarly valued. These stocks are Werner Enterprises, Inc. (NASDAQ:WERN), Skyline Champion Corporation (NYSE:SKY), CNX Resources Corporation (NYSE:CNX), Alamos Gold Inc (NYSE:AGI), Kennametal Inc. (NYSE:KMT), Hilltop Holdings Inc. (NYSE:HTH), and Jumia Technologies AG (NYSE:JMIA). This group of stocks' market caps are similar to AMWL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WERN,20,203288,-1 SKY,23,353727,0 CNX,30,539926,7 AGI,20,221648,-2 KMT,18,376031,5 HTH,8,44603,-8 JMIA,14,153915,-2 Average,19,270448,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $125 million in AMWL's case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Hilltop Holdings Inc. (NYSE:HTH) is the least popular one with only 8 bullish hedge fund positions. American Well Corporation (NYSE:AMWL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMWL is 57.3. 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 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately AMWL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AMWL were disappointed as the stock returned -31.2% since the end of June (through 10/22) 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.