Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Anterix Inc. (NASDAQ:ATEX) changed recently.
Is ATEX a good stock to buy now? Hedge fund interest in Anterix Inc. (NASDAQ:ATEX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ATEX 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). 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 Tutor Perini Corp (NYSE:TPC), Tenneco Inc (NYSE:TEN), and Avita Medical Limited (NASDAQ:RCEL) to gather more data points.
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.
Jeffrey Altman of Owl Creek Asset Management
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 let's review the latest hedge fund action surrounding Anterix Inc. (NASDAQ:ATEX).
Do Hedge Funds Think ATEX Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in ATEX a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Owl Creek Asset Management was the largest shareholder of Anterix Inc. (NASDAQ:ATEX), with a stake worth $171.8 million reported as of the end of September. Trailing Owl Creek Asset Management was Lomas Capital Management, which amassed a stake valued at $40 million. Hudson Bay Capital Management, MFP Investors, and QVT Financial were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Owl Creek Asset Management allocated the biggest weight to Anterix Inc. (NASDAQ:ATEX), around 11.42% of its 13F portfolio. Lomas Capital Management is also relatively very bullish on the stock, earmarking 6.54 percent of its 13F equity portfolio to ATEX.
Due to the fact that Anterix Inc. (NASDAQ:ATEX) has witnessed falling interest from hedge fund managers, we can see that there lies a certain "tier" of funds that slashed their positions entirely last quarter. Interestingly, Brad Farber's Atika Capital sold off the largest position of the 750 funds monitored by Insider Monkey, comprising an estimated $5.6 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dropped about $1 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Anterix Inc. (NASDAQ:ATEX). We will take a look at Tutor Perini Corp (NYSE:TPC), Tenneco Inc (NYSE:TEN), AVITA Medical, Inc. (NASDAQ:RCEL), Tanger Factory Outlet Centers Inc. (NYSE:SKT), Playa Hotels & Resorts N.V. (NASDAQ:PLYA), Apogee Enterprises, Inc. (NASDAQ:APOG), and Crossamerica Partners LP (NYSE:CAPL). This group of stocks' market valuations resemble ATEX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TPC,13,24265,-3 TEN,18,82480,4 RCEL,5,59882,3 SKT,13,23915,-2 PLYA,16,259892,-1 APOG,12,25259,2 CAPL,1,165,0 Average,11.1,67980,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $292 million in ATEX's case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 1 bullish hedge fund positions. Anterix Inc. (NASDAQ:ATEX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATEX is 82.1. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately ATEX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ATEX were disappointed as the stock returned -11.9% since the end of September (through 12/14) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.