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Hedge Funds Are Buying Adtalem Global Education Inc. (ATGE)

Asma UL Husna

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Adtalem Global Education Inc. (NYSE:ATGE).

Adtalem Global Education Inc. (NYSE:ATGE) was in 22 hedge funds' portfolios at the end of September. ATGE investors should be aware of an increase in hedge fund sentiment recently. There were 14 hedge funds in our database with ATGE holdings at the end of the previous quarter. Our calculations also showed that ATGE 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
5 Most Popular Stocks Among Hedge Funds

To most shareholders, hedge funds are viewed as worthless, old investment vehicles of the past. While there are more than 8000 funds trading at present, Our researchers hone in on the moguls of this club, approximately 750 funds. Most estimates calculate that this group of people preside over the majority of the smart money's total asset base, and by tailing their highest performing picks, Insider Monkey has unearthed numerous investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year 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 .

[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]

Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer PEAK6 Capital

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. We're going to review the recent hedge fund action surrounding Adtalem Global Education Inc. (NYSE:ATGE).

What have hedge funds been doing with Adtalem Global Education Inc. (NYSE:ATGE)?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 57% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in ATGE a year ago. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

More specifically, AQR Capital Management was the largest shareholder of Adtalem Global Education Inc. (NYSE:ATGE), with a stake worth $53.4 million reported as of the end of September. Trailing AQR Capital Management was Ariel Investments, which amassed a stake valued at $36.3 million. Arrowstreet Capital, D E Shaw, and Newtyn Management were 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 Newtyn Management allocated the biggest weight to Adtalem Global Education Inc. (NYSE:ATGE), around 2.24% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, designating 0.48 percent of its 13F equity portfolio to ATGE.

As industrywide interest jumped, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized call position in Adtalem Global Education Inc. (NYSE:ATGE). Citadel Investment Group had $4.2 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $1.4 million investment in the stock during the quarter. The other funds with brand new ATGE positions are Bruce Kovner's Caxton Associates, Matthew Hulsizer's PEAK6 Capital Management, and Renaissance Technologies.

Let's now review hedge fund activity in other stocks similar to Adtalem Global Education Inc. (NYSE:ATGE). We will take a look at Acceleron Pharma Inc (NASDAQ:XLRN), Retail Opportunity Investments Corp (NASDAQ:ROIC), Dana Incorporated (NYSE:DAN), and Ambarella Inc (NASDAQ:AMBA). This group of stocks' market valuations are closest to ATGE's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XLRN,23,321739,2 ROIC,18,77228,5 DAN,25,192399,0 AMBA,28,255178,7 Average,23.5,211636,3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $201 million in ATGE's case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand Retail Opportunity Investments Corp (NASDAQ:ROIC) is the least popular one with only 18 bullish hedge fund positions. Adtalem Global Education Inc. (NYSE:ATGE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately ATGE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ATGE investors were disappointed as the stock returned -11.4% during the first two months of the fourth quarter 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 in Q4.

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

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