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In this article we will take a look at whether hedge funds think Apollo Medical Holdings, Inc. (NASDAQ:AMEH) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Apollo Medical Holdings, Inc. (NASDAQ:AMEH) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Qudian Inc. (NYSE:QD), Adecoagro SA (NYSE:AGRO), and Diamond Eagle Acquisition Corp. (NASDAQ:DEACU) to gather more data points. Our calculations also showed that AMEH isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Roger Ibbotson of Zebra Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's view the key hedge fund action regarding Apollo Medical Holdings, Inc. (NASDAQ:AMEH).
Hedge fund activity in Apollo Medical Holdings, Inc. (NASDAQ:AMEH)
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in AMEH 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.
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in Apollo Medical Holdings, Inc. (NASDAQ:AMEH). Millennium Management has a $1.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Winton Capital Management, led by David Harding, holding a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions consist of Roger Ibbotson's Zebra Capital Management, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Apollo Medical Holdings, Inc. (NASDAQ:AMEH), around 0.39% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to AMEH.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: ExodusPoint Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's now take a look at hedge fund activity in other stocks similar to Apollo Medical Holdings, Inc. (NASDAQ:AMEH). These stocks are Qudian Inc. (NYSE:QD), Adecoagro SA (NYSE:AGRO), Diamond Eagle Acquisition Corp. (NASDAQ:DEACU), and Accelerate Diagnostics Inc (NASDAQ:AXDX). This group of stocks' market caps resemble AMEH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QD,10,15458,-4 AGRO,14,114033,2 DEACU,35,172599,12 AXDX,9,25259,2 Average,17,81837,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $2 million in AMEH's case. Diamond Eagle Acquisition Corp. (NASDAQ:DEACU) is the most popular stock in this table. On the other hand Accelerate Diagnostics Inc (NASDAQ:AXDX) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Apollo Medical Holdings, Inc. (NASDAQ:AMEH) is even less popular than AXDX. Hedge funds clearly dropped the ball on AMEH as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AMEH as the stock returned 46.2% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.