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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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. What do these smart investors think about Apollo Commercial Real Est. Finance Inc (NYSE:ARI)?
Is ARI a good stock to buy now? Apollo Commercial Real Est. Finance Inc (NYSE:ARI) was in 14 hedge funds' portfolios at the end of September. The all time high for this statistic is 17. ARI has experienced an increase in hedge fund interest lately. There were 10 hedge funds in our database with ARI holdings at the end of June. Our calculations also showed that ARI 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.
Ken Griffin of Citadel Investment Group
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 gander at the latest hedge fund action regarding Apollo Commercial Real Est. Finance Inc (NYSE:ARI).
Do Hedge Funds Think ARI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ARI over the last 21 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in Apollo Commercial Real Est. Finance Inc (NYSE:ARI). D E Shaw has a $18.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $3.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Renaissance Technologies, Ken Griffin's Citadel Investment Group and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Quantamental Technologies allocated the biggest weight to Apollo Commercial Real Est. Finance Inc (NYSE:ARI), around 0.08% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to ARI.
As aggregate interest increased, some big names were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Apollo Commercial Real Est. Finance Inc (NYSE:ARI). Arrowstreet Capital had $1.1 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Paul Tudor Jones's Tudor Investment Corp, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's also examine hedge fund activity in other stocks similar to Apollo Commercial Real Est. Finance Inc (NYSE:ARI). We will take a look at Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Silicon Motion Technology Corp. (NASDAQ:SIMO), Hercules Capital Inc (NYSE:HTGC), NIC Inc. (NASDAQ:EGOV), Itau CorpBanca (NYSE:ITCB), Colony Capital Inc (NYSE:CLNY), and M/I Homes Inc (NYSE:MHO). All of these stocks' market caps resemble ARI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MDRX,22,129055,6 SIMO,15,216253,-2 HTGC,13,42715,-2 EGOV,14,95062,-2 ITCB,1,1163,0 CLNY,24,188771,8 MHO,18,115813,3 Average,15.3,112690,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $33 million in ARI's case. Colony Capital Inc (NYSE:CLNY) is the most popular stock in this table. On the other hand Itau CorpBanca (NYSE:ITCB) is the least popular one with only 1 bullish hedge fund positions. Apollo Commercial Real Est. Finance Inc (NYSE:ARI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ARI is 62. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on ARI as the stock returned 26.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.