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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Apollo Global Management Inc (NYSE:APO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is APO stock a buy? Money managers were getting more optimistic. The number of bullish hedge fund positions inched up by 2 lately. Apollo Global Management Inc (NYSE:APO) was in 30 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 34. Our calculations also showed that APO isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 28 hedge funds in our database with APO positions at the end of the third quarter.
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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
Chase Coleman of Tiger Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x 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 we're going to take a peek at the recent hedge fund action surrounding Apollo Global Management Inc (NYSE:APO).
Do Hedge Funds Think APO Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in APO 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the most valuable position in Apollo Global Management Inc (NYSE:APO). Tiger Global Management LLC has a $1.6611 billion position in the stock, comprising 4.3% of its 13F portfolio. Sitting at the No. 2 spot is Markel Gayner Asset Management, led by Tom Gayner, holding a $49.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain Richard Merage's MIG Capital, David Brown's Hawk Ridge Management and Robert Joseph Caruso's Select Equity Group. In terms of the portfolio weights assigned to each position Tiger Legatus Capital allocated the biggest weight to Apollo Global Management Inc (NYSE:APO), around 6.93% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, setting aside 6.65 percent of its 13F equity portfolio to APO.
Consequently, some big names have jumped into Apollo Global Management Inc (NYSE:APO) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Apollo Global Management Inc (NYSE:APO). Marshall Wace LLP had $8.1 million invested in the company at the end of the quarter. Peter Seuss's Prana Capital Management also made a $3.7 million investment in the stock during the quarter. The following funds were also among the new APO investors: Louis Bacon's Moore Global Investments, D. E. Shaw's D E Shaw, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Apollo Global Management Inc (NYSE:APO). We will take a look at Paylocity Holding Corp (NASDAQ:PCTY), Carlyle Group Inc (NASDAQ:CG), The Scotts Miracle-Gro Company (NYSE:SMG), Bill.com Holdings, Inc. (NYSE:BILL), Textron Inc. (NYSE:TXT), Mirati Therapeutics, Inc. (NASDAQ:MRTX), and Bentley Systems, Incorporated (NASDAQ:BSY). This group of stocks' market valuations resemble APO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PCTY,26,638940,-1 CG,21,369178,7 SMG,29,454757,-2 BILL,52,1993749,8 TXT,23,589474,0 MRTX,56,3610322,18 BSY,19,82011,0 Average,32.3,1105490,4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1105 million. That figure was $2053 million in APO's case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Bentley Systems, Incorporated (NASDAQ:BSY) is the least popular one with only 19 bullish hedge fund positions. Apollo Global Management Inc (NYSE:APO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APO is 48.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately APO wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); APO investors were disappointed as the stock returned -1.8% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.