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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 American Superconductor Corporation (NASDAQ:AMSC) in this article.
Is AMSC a good stock to buy now? American Superconductor Corporation (NASDAQ:AMSC) has seen a decrease in hedge fund sentiment in recent months. American Superconductor Corporation (NASDAQ:AMSC) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that AMSC 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).
Video: 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 was 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Thomas Claugus of GMT Capital
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Now let's go over the key hedge fund action encompassing American Superconductor Corporation (NASDAQ:AMSC).
Hedge fund activity in American Superconductor Corporation (NASDAQ:AMSC)
At the end of September, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AMSC over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in American Superconductor Corporation (NASDAQ:AMSC) was held by Renaissance Technologies, which reported holding $16.9 million worth of stock at the end of September. It was followed by Royce & Associates with a $9.3 million position. Other investors bullish on the company included Hudson Bay Capital Management, GMT Capital, and PEAK6 Capital Management. In terms of the portfolio weights assigned to each position GMT Capital allocated the biggest weight to American Superconductor Corporation (NASDAQ:AMSC), around 0.54% of its 13F portfolio. Hudson Bay Capital Management is also relatively very bullish on the stock, designating 0.12 percent of its 13F equity portfolio to AMSC.
Seeing as American Superconductor Corporation (NASDAQ:AMSC) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds that elected to cut their entire stakes last quarter. At the top of the heap, Till Bechtolsheimer's Arosa Capital Management sold off the largest investment of the 750 funds followed by Insider Monkey, totaling about $2.8 million in stock, and Minhua Zhang's Weld Capital Management was right behind this move, as the fund sold off about $0.3 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as American Superconductor Corporation (NASDAQ:AMSC) but similarly valued. These stocks are Zix Corporation (NASDAQ:ZIXI), New Senior Investment Group Inc (NYSE:SNR), Tiziana Life Sciences plc (NASDAQ:TLSA), Pivotal Investment Corporation II (NYSE:PIC), Legacy Housing Corporation (NASDAQ:LEGH), Gladstone Land Corporation (NASDAQ:LAND), and MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT). This group of stocks' market caps are closest to AMSC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZIXI,7,17203,-9 SNR,13,50201,1 TLSA,4,1035,3 PIC,13,68804,1 LEGH,7,14115,3 LAND,7,10307,0 MCFT,17,109222,-4 Average,9.7,38698,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $47 million in AMSC's case. MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) is the most popular stock in this table. On the other hand Tiziana Life Sciences plc (NASDAQ:TLSA) is the least popular one with only 4 bullish hedge fund positions. American Superconductor Corporation (NASDAQ:AMSC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMSC is 32.4. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on AMSC as the stock returned 23.2% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.