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Hedge Funds Are Betting On Apollo Global Management, Inc. (APO)

Abigail Fisher

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Apollo Global Management, Inc. (NYSE:APO).

Apollo Global Management, Inc. (NYSE:APO) was in 24 hedge funds' portfolios at the end of September. APO investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 23 hedge funds in our database with APO holdings at the end of the previous quarter. Our calculations also showed that APO 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.

5 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 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 the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's check out the new hedge fund action encompassing Apollo Global Management, Inc.(NYSE:APO).

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

Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards APO over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

APO_dec2019

When looking at the institutional investors followed by Insider Monkey, Chase Coleman's Tiger Global Management has the most valuable position in Apollo Global Management, Inc. (NYSE:APO), worth close to $1.4244 billion, accounting for 7.5% of its total 13F portfolio. Sitting at the No. 2 spot is Samlyn Capital, managed by Robert Pohly, which holds a $56.3 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain Louis Bacon's Moore Global Investments, Tom Gayner's Markel Gayner Asset Management and Robert Joseph Caruso's Select Equity Group. In terms of the portfolio weights assigned to each position Tiger Global Management allocated the biggest weight to Apollo Global Management, Inc. (NYSE:APO), around 7.54% of its portfolio. Concourse Capital Management is also relatively very bullish on the stock, setting aside 6.57 percent of its 13F equity portfolio to APO.

As one would reasonably expect, key money managers have jumped into Apollo Global Management, Inc. (NYSE:APO) headfirst. Samlyn Capital, managed by Robert Pohly, established the largest position in Apollo Global Management, Inc. (NYSE:APO). Samlyn Capital had $56.3 million invested in the company at the end of the quarter. Louis Bacon's Moore Global Investments also initiated a $42.8 million position during the quarter. The following funds were also among the new APO investors: Clint Carlson's Carlson Capital, Joe DiMenna's ZWEIG DIMENNA PARTNERS, and Steve Cohen's Point72 Asset Management.

Let's now review hedge fund activity in other stocks similar to Apollo Global Management, Inc. (NYSE:APO). We will take a look at TransUnion (NYSE:TRU), PagSeguro Digital Ltd. (NYSE:PAGS), CenterPoint Energy, Inc. (NYSE:CNP), and Magellan Midstream Partners, L.P. (NYSE:MMP). This group of stocks' market caps match APO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRU,34,1040934,4 PAGS,35,1381252,5 CNP,27,1089888,-2 MMP,12,55553,2 Average,27,891907,2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $892 million. That figure was $1733 million in APO's case. PagSeguro Digital Ltd. (NYSE:PAGS) is the most popular stock in this table. On the other hand Magellan Midstream Partners, L.P. (NYSE:MMP) is the least popular one with only 12 bullish hedge fund positions. Apollo Global Management, Inc. (NYSE:APO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on APO as the stock returned 17.2% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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