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Hedge Funds Are Betting On AMC Entertainment Holdings Inc (AMC)

·6 min read

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in AMC Entertainment Holdings Inc (NYSE:AMC)? The smart money sentiment can provide an answer to this question.

Is AMC Entertainment Holdings Inc (NYSE:AMC) the right pick for your portfolio? Investors who are in the know were getting more bullish. The number of bullish hedge fund bets inched up by 2 lately. AMC Entertainment Holdings Inc (NYSE:AMC) was in 21 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 31. Our calculations also showed that AMC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the eyes of most investors, hedge funds are seen as worthless, old financial tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, We look at the bigwigs of this group, around 850 funds. These money managers manage the lion's share of the hedge fund industry's total asset base, and by keeping an eye on their finest stock picks, Insider Monkey has deciphered a few investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a look at the recent hedge fund action regarding AMC Entertainment Holdings Inc (NYSE:AMC).

Do Hedge Funds Think AMC Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AMC over the last 24 quarters. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Is AMC A Good Stock To Buy?
Is AMC A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in AMC Entertainment Holdings Inc (NYSE:AMC). Citadel Investment Group has a $338.1 million call position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by 683 Capital Partners, led by Ari Zweiman, holding a $135.8 million call position; 4.7% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Renaissance Technologies, D. E. Shaw's D E Shaw and Ike Kier and Ilya Zaides's KG Funds Management. In terms of the portfolio weights assigned to each position KG Funds Management allocated the biggest weight to AMC Entertainment Holdings Inc (NYSE:AMC), around 7.95% of its 13F portfolio. Altai Capital is also relatively very bullish on the stock, designating 6.89 percent of its 13F equity portfolio to AMC.

As one would reasonably expect, key hedge funds were leading the bulls' herd. KG Funds Management, managed by Ike Kier and Ilya Zaides, established the most outsized position in AMC Entertainment Holdings Inc (NYSE:AMC). KG Funds Management had $78.7 million invested in the company at the end of the quarter. Parvinder Thiara's Athanor Capital also initiated a $38 million position during the quarter. The following funds were also among the new AMC investors: Kenneth Tropin's Graham Capital Management, Robert Henry Lynch's Aristeia Capital, and Lawrence Kam's Sonic Capital.

Let's now review hedge fund activity in other stocks similar to AMC Entertainment Holdings Inc (NYSE:AMC). These stocks are Zebra Technologies Corporation (NASDAQ:ZBRA), Verisk Analytics, Inc. (NASDAQ:VRSK), Maxim Integrated Products Inc. (NASDAQ:MXIM), Synchrony Financial (NYSE:SYF), WEC Energy Group, Inc. (NYSE:WEC), American Water Works Company, Inc. (NYSE:AWK), and Magna International Inc. (NYSE:MGA). This group of stocks' market values match AMC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZBRA,34,1206955,-1 VRSK,36,1738237,2 MXIM,56,4210328,1 SYF,39,1541005,-10 WEC,27,499940,10 AWK,30,1076976,0 MGA,39,576231,5 Average,37.3,1549953,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1550 million. That figure was $404 million in AMC's case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand WEC Energy Group, Inc. (NYSE:WEC) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks AMC Entertainment Holdings Inc (NYSE:AMC) is even less popular than WEC. Our overall hedge fund sentiment score for AMC is 27.3. 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. Hedge funds dodged a bullet by taking a bearish stance towards AMC. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd but managed to beat the market again by 1.6 percentage points. Unfortunately AMC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); AMC investors were disappointed as the stock returned -35.4% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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