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Is Ames National Corporation (NASDAQ:ATLO) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Hedge fund interest in Ames National Corporation (NASDAQ:ATLO) 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 Unity Biotechnology, Inc. (NASDAQ:UBX), Compugen Ltd. (NASDAQ:CGEN), and ShotSpotter, Inc. (NASDAQ:SSTI) to gather more data points. Our calculations also showed that ATLO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are viewed as unimportant, old investment tools of the past. While there are greater than 8000 funds with their doors open today, Our researchers hone in on the masters of this club, approximately 750 funds. Most estimates calculate that this group of people shepherd the majority of the hedge fund industry's total asset base, and by monitoring their matchless stock picks, Insider Monkey has come up with several investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
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Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to review the fresh hedge fund action surrounding Ames National Corporation (NASDAQ:ATLO).
How have hedgies been trading Ames National Corporation (NASDAQ:ATLO)?
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATLO over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Ames National Corporation (NASDAQ:ATLO), which was worth $15.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.7 million worth of shares. Stadium Capital Management was 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 Stadium Capital Management allocated the biggest weight to Ames National Corporation (NASDAQ:ATLO), around 1.24% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.14 percent of its 13F equity portfolio to ATLO.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ames National Corporation (NASDAQ:ATLO) but similarly valued. These stocks are Unity Biotechnology, Inc. (NASDAQ:UBX), Compugen Ltd. (NASDAQ:CGEN), ShotSpotter, Inc. (NASDAQ:SSTI), and Tsakos Energy Navigation Ltd. (NYSE:TNP). This group of stocks' market values are similar to ATLO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBX,4,4111,-1 CGEN,4,7644,-1 SSTI,6,12594,0 TNP,7,27496,1 Average,5.25,12961,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $21 million in ATLO's case. Tsakos Energy Navigation Ltd. (NYSE:TNP) is the most popular stock in this table. On the other hand Unity Biotechnology, Inc. (NASDAQ:UBX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Ames National Corporation (NASDAQ:ATLO) is even less popular than UBX. Hedge funds dodged a bullet by taking a bearish stance towards ATLO. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ATLO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ATLO investors were disappointed as the stock returned -0.6% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.