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In this article you are going to find out whether hedge funds think Aphria Inc. (NYSE:APHA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is APHA a good stock to buy now? The smart money was taking a bearish view. The number of bullish hedge fund bets went down by 1 recently. Aphria Inc. (NYSE:APHA) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 9. Our calculations also showed that APHA 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 9 hedge funds in our database with APHA positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are a multitude of tools investors employ to size up stocks. Some of the best tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top investment managers can trounce the S&P 500 by a significant amount (see the details here).
Michael Gelband of ExodusPoint 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. Keeping this in mind we're going to take a peek at the recent hedge fund action regarding Aphria Inc. (NYSE:APHA).
Hedge fund activity in Aphria Inc. (NYSE:APHA)
At third quarter's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in APHA 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.
The largest stake in Aphria Inc. (NYSE:APHA) was held by Peconic Partners LLC, which reported holding $8.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $3 million position. Other investors bullish on the company included Citadel Investment Group, EMS Capital, and Granite Point Capital. In terms of the portfolio weights assigned to each position Peconic Partners LLC allocated the biggest weight to Aphria Inc. (NYSE:APHA), around 1.59% of its 13F portfolio. EMS Capital is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to APHA.
Because Aphria Inc. (NYSE:APHA) has faced declining sentiment from hedge fund managers, it's easy to see that there was a specific group of hedgies that decided to sell off their positions entirely last quarter. At the top of the heap, Steve Cohen's Point72 Asset Management dropped the biggest stake of the 750 funds watched by Insider Monkey, totaling an estimated $0.8 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dumped about $0.4 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Aphria Inc. (NYSE:APHA). These stocks are Renasant Corporation (NASDAQ:RNST), Mersana Therapeutics, Inc. (NASDAQ:MRSN), Beam Therapeutics Inc. (NASDAQ:BEAM), Adtalem Global Education Inc. (NYSE:ATGE), Black Stone Minerals LP (NYSE:BSM), The RealReal, Inc. (NASDAQ:REAL), and Myovant Sciences Ltd. (NYSE:MYOV). This group of stocks' market caps are closest to APHA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RNST,9,19980,-1 MRSN,28,445697,3 BEAM,7,193738,-3 ATGE,24,246607,2 BSM,4,6551,-1 REAL,26,245308,7 MYOV,17,80221,0 Average,16.4,176872,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $11 million in APHA's case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 4 bullish hedge fund positions. Aphria Inc. (NYSE:APHA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APHA is 39. 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 APHA as the stock returned 87.4% 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.