Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Alaska Communications Systems Group Inc (NASDAQ:ALSK) based on that data.
Alaska Communications Systems Group Inc (NASDAQ:ALSK) shareholders have witnessed an increase in enthusiasm from smart money lately. ALSK was in 8 hedge funds' portfolios at the end of March. There were 5 hedge funds in our database with ALSK holdings at the end of the previous quarter. Our calculations also showed that ALSK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_738761" align="aligncenter" width="394"] Fred DiSanto of Ancora Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the recent hedge fund action surrounding Alaska Communications Systems Group Inc (NASDAQ:ALSK).
How have hedgies been trading Alaska Communications Systems Group Inc (NASDAQ:ALSK)?
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in ALSK a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Alaska Communications Systems Group Inc (NASDAQ:ALSK), which was worth $5.1 million at the end of the third quarter. On the second spot was Ancora Advisors which amassed $0.5 million worth of shares. Millennium Management, Arrowstreet Capital, and ExodusPoint Capital 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 Ancora Advisors allocated the biggest weight to Alaska Communications Systems Group Inc (NASDAQ:ALSK), around 0.02% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to ALSK.
Consequently, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the biggest position in Alaska Communications Systems Group Inc (NASDAQ:ALSK). Millennium Management had $0.1 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0 million position during the quarter. The following funds were also among the new ALSK investors: Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors and Qing Li's Sciencast Management.
Let's go over hedge fund activity in other stocks similar to Alaska Communications Systems Group Inc (NASDAQ:ALSK). We will take a look at Zagg Inc (NASDAQ:ZAGG), Twin Disc, Incorporated (NASDAQ:TWIN), Clipper Realty Inc. (NYSE:CLPR), and Landmark Bancorp, Inc. (NASDAQ:LARK). This group of stocks' market caps match ALSK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZAGG,8,19992,-1 TWIN,5,17069,-2 CLPR,9,21816,1 LARK,3,3718,0 Average,6.25,15649,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $6 million in ALSK's case. Clipper Realty Inc. (NYSE:CLPR) is the most popular stock in this table. On the other hand Landmark Bancorp, Inc. (NASDAQ:LARK) is the least popular one with only 3 bullish hedge fund positions. Alaska Communications Systems Group Inc (NASDAQ:ALSK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on ALSK as the stock returned 57.3% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.