We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Alpha Pro Tech, Ltd. (NYSE:APT) based on that data.
Is Alpha Pro Tech, Ltd. (NYSE:APT) undervalued? Money managers are in a bullish mood. The number of long hedge fund bets increased by 3 recently. Our calculations also showed that APT 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). APT was in 5 hedge funds' portfolios at the end of the first quarter of 2020. There were 2 hedge funds in our database with APT positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_256989" align="aligncenter" width="400"] Dmitry Balyasny of Balyasny Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the key hedge fund action regarding Alpha Pro Tech, Ltd. (NYSE:APT).
What does smart money think about Alpha Pro Tech, Ltd. (NYSE:APT)?
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 150% from the fourth quarter of 2019. By comparison, 2 hedge funds held shares or bullish call options in APT a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Alpha Pro Tech, Ltd. (NYSE:APT) was held by Renaissance Technologies, which reported holding $12.6 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $4 million position. Other investors bullish on the company included Balyasny Asset Management, OZ Management, and Millennium Management. In terms of the portfolio weights assigned to each position Balyasny Asset Management allocated the biggest weight to Alpha Pro Tech, Ltd. (NYSE:APT), around 0.02% of its 13F portfolio. OZ Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to APT.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Alpha Pro Tech, Ltd. (NYSE:APT). Balyasny Asset Management had $1.3 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also initiated a $1 million position during the quarter. The other funds with brand new APT positions are Israel Englander's Millennium Management and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Alpha Pro Tech, Ltd. (NYSE:APT) but similarly valued. We will take a look at Liminal BioSciences Inc. (NASDAQ:LMNL), ESSA Bancorp, Inc. (NASDAQ:ESSA), Solar Senior Capital Ltd (NASDAQ:SUNS), and iCAD Inc (NASDAQ:ICAD). This group of stocks' market caps are closest to APT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMNL,1,21980,0 ESSA,2,9991,-1 SUNS,3,859,2 ICAD,13,21814,0 Average,4.75,13661,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $15 million in APT's case. iCAD Inc (NASDAQ:ICAD) is the most popular stock in this table. On the other hand Liminal BioSciences Inc. (NASDAQ:LMNL) is the least popular one with only 1 bullish hedge fund positions. Alpha Pro Tech, Ltd. (NYSE:APT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately APT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on APT were disappointed as the stock returned 3.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.