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Did Hedge Funds Drop The Ball On Apollo Global Management, Inc. (APO) ?

Nina Todic

With the first-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 second quarter. One of these stocks was Apollo Global Management, Inc. (NYSE:APO).

Apollo Global Management, Inc. (NYSE:APO) was in 23 hedge funds' portfolios at the end of June. APO has experienced an increase in enthusiasm from smart money of late. There were 18 hedge funds in our database with APO positions at the end of the previous quarter. Our calculations also showed that APO isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_26088" align="aligncenter" width="508"] Chase Coleman of Tiger Global[/caption]

Chase Coleman of Tiger Global

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a glance at the key hedge fund action surrounding Apollo Global Management, Inc. (NYSE:APO).

How are hedge funds trading Apollo Global Management, Inc. (NYSE:APO)?

At Q2's end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards APO over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with APO Positions

More specifically, Tiger Global Management LLC was the largest shareholder of Apollo Global Management, Inc.(NYSE:APO), with a stake worth $1291.9 million reported as of the end of March. Trailing Tiger Global Management LLC was HMI Capital, which amassed a stake valued at $205.8 million. Select Equity Group, Markel Gayner Asset Management, and McKinley Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, key money managers have been driving this bullishness. Miller Value Partners, managed by Bill Miller, established the biggest position in Apollo Global Management, Inc. (NYSE:APO). Miller Value Partners had $15.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $5.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeff Lignelli's Incline Global Management, Jody LaNasa's Serengeti Asset Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Apollo Global Management, Inc. (NYSE:APO) but similarly valued. We will take a look at American Airlines Group Inc (NASDAQ:AAL), Wynn Resorts, Limited (NASDAQ:WYNN), Invitation Homes Inc. (NYSE:INVH), and Live Nation Entertainment, Inc. (NYSE:LYV). This group of stocks' market values match APO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AAL,34,2010537,-7 WYNN,39,1943762,-5 INVH,31,684813,7 LYV,39,980822,0 Average,35.75,1404984,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.75 hedge funds with bullish positions and the average amount invested in these stocks was $1405 million. That figure was $1703 million in APO's case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Invitation Homes Inc. (NYSE:INVH) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Apollo Global Management, Inc. (NYSE:APO) is even less popular than INVH. Hedge funds clearly dropped the ball on APO as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks (view the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on APO as the stock returned 12% during the third quarter and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Disclosure: None. This article was originally published at Insider Monkey.

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