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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Atlas Technical Consultants, Inc. (NASDAQ:ATCX).
Is ATCX a good stock to buy now? Atlas Technical Consultants, Inc. (NASDAQ:ATCX) was in 9 hedge funds' portfolios at the end of September. The all time high for this statistics is 11. ATCX shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 10 hedge funds in our database with ATCX positions at the end of the second quarter. Our calculations also showed that ATCX 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Platt of BlueCrest Capital Mgmt.
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 check out the key hedge fund action encompassing Atlas Technical Consultants, Inc. (NASDAQ:ATCX).
Do Hedge Funds Think ATCX Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the second quarter of 2020. On the other hand, there were a total of 9 hedge funds with a bullish position in ATCX 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.
According to Insider Monkey's hedge fund database, BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, holds the largest position in Atlas Technical Consultants, Inc. (NASDAQ:ATCX). BlueCrest Capital Mgmt. has a $4.9 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $2.1 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers with similar optimism consist of Frederick DiSanto's Ancora Advisors, John M. Angelo and Michael L. Gordon's Angelo Gordon & Co and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position BlueCrest Capital Mgmt. allocated the biggest weight to Atlas Technical Consultants, Inc. (NASDAQ:ATCX), around 0.18% of its 13F portfolio. Angelo Gordon & Co is also relatively very bullish on the stock, setting aside 0.15 percent of its 13F equity portfolio to ATCX.
Because Atlas Technical Consultants, Inc. (NASDAQ:ATCX) has faced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of funds who were dropping their full holdings heading into Q4. Intriguingly, Paul Glazer's Glazer Capital dropped the largest stake of the "upper crust" of funds watched by Insider Monkey, worth an estimated $0.1 million in stock, and Phillip Goldstein, Andrew Dakos and Steven Samuels's Bulldog Investors was right behind this move, as the fund cut about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Atlas Technical Consultants, Inc. (NASDAQ:ATCX) but similarly valued. These stocks are Trxade Group, Inc. (NASDAQ:MEDS), Moleculin Biotech, Inc. (NASDAQ:MBRX), IF Bancorp Inc (NASDAQ:IROQ), Kazia Therapeutics Limited (NASDAQ:KZIA), Synalloy Corporation (NASDAQ:SYNL), Seelos Therapeutics, Inc. (NASDAQ:SEEL), and JMP Group LLC (NYSE:JMP). This group of stocks' market values are closest to ATCX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MEDS,2,3855,0 MBRX,2,895,0 IROQ,2,2301,0 KZIA,1,523,0 SYNL,5,6283,-2 SEEL,4,757,2 JMP,2,87,0 Average,2.6,2100,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $10 million in ATCX's case. Synalloy Corporation (NASDAQ:SYNL) is the most popular stock in this table. On the other hand Kazia Therapeutics Limited (NASDAQ:KZIA) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Atlas Technical Consultants, Inc. (NASDAQ:ATCX) is more popular among hedge funds. Our overall hedge fund sentiment score for ATCX is 78.5. 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. Unfortunately ATCX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ATCX were disappointed as the stock returned -15.1% since the end of the third quarter (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.