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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Assured Guaranty Ltd. (NYSE:AGO) to find out whether there were any major changes in hedge funds' views.
Assured Guaranty Ltd. (NYSE:AGO) has seen an increase in enthusiasm from smart money recently. Assured Guaranty Ltd. (NYSE:AGO) was in 22 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. There were 17 hedge funds in our database with AGO holdings at the end of December. Our calculations also showed that AGO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Donald Sussman of Paloma Partners
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Do Hedge Funds Think AGO Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AGO over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kahn Brothers, holds the largest position in Assured Guaranty Ltd. (NYSE:AGO). Kahn Brothers has a $61.9 million position in the stock, comprising 9.6% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $24.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and Lawrence Kam's Sonic Capital. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to Assured Guaranty Ltd. (NYSE:AGO), around 9.58% of its 13F portfolio. Sonic Capital is also relatively very bullish on the stock, setting aside 5.24 percent of its 13F equity portfolio to AGO.
As one would reasonably expect, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Assured Guaranty Ltd. (NYSE:AGO). Arrowstreet Capital had $24.4 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $2.9 million investment in the stock during the quarter. The following funds were also among the new AGO investors: Paul Marshall and Ian Wace's Marshall Wace LLP, Greg Eisner's Engineers Gate Manager, and Qing Li's Sciencast Management.
Let's go over hedge fund activity in other stocks similar to Assured Guaranty Ltd. (NYSE:AGO). We will take a look at Shutterstock Inc (NYSE:SSTK), Revolve Group, Inc. (NYSE:RVLV), Vertex, Inc. (NASDAQ:VERX), Butterfly Network, Inc. (NYSE:BFLY), Summit Materials Inc (NYSE:SUM), Camping World Holdings, Inc. (NYSE:CWH), and Onto Innovation Inc. (NYSE:ONTO). This group of stocks' market caps resemble AGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSTK,18,207880,-5 RVLV,29,256608,5 VERX,11,40913,0 BFLY,32,299537,32 SUM,32,198758,1 CWH,24,325789,-3 ONTO,18,297070,-1 Average,23.4,232365,4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $193 million in AGO's case. Butterfly Network, Inc. (NYSE:BFLY) is the most popular stock in this table. On the other hand Vertex, Inc. (NASDAQ:VERX) is the least popular one with only 11 bullish hedge fund positions. Assured Guaranty Ltd. (NYSE:AGO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AGO is 53.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on AGO, though not to the same extent, as the stock returned 9.9% since the end of Q1 (through July 16th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.