The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought AMETEK, Inc. (NYSE:AME) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is AMETEK, Inc. (NYSE:AME) worth your attention right now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund positions increased by 7 in recent months. AMETEK, Inc. (NYSE:AME) was in 40 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AME isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Mario Gabelli of GAMCO Investors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let's take a look at the recent hedge fund action surrounding AMETEK, Inc. (NYSE:AME).
Hedge fund activity in AMETEK, Inc. (NYSE:AME)
At Q2's end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the first quarter of 2020. On the other hand, there were a total of 31 hedge funds with a bullish position in AME a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Ken Griffin's Citadel Investment Group has the biggest position in AMETEK, Inc. (NYSE:AME), worth close to $255 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, managed by D. E. Shaw, which holds a $136.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise Mario Gabelli's GAMCO Investors, Israel Englander's Millennium Management and Francois Rochon's Giverny Capital. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to AMETEK, Inc. (NYSE:AME), around 6.64% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, designating 5.05 percent of its 13F equity portfolio to AME.
With a general bullishness amongst the heavyweights, some big names have jumped into AMETEK, Inc. (NYSE:AME) headfirst. Southpoint Capital Advisors, managed by John Smith Clark, initiated the most valuable position in AMETEK, Inc. (NYSE:AME). Southpoint Capital Advisors had $53.6 million invested in the company at the end of the quarter. Greg Poole's Echo Street Capital Management also made a $34.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Anand Parekh's Alyeska Investment Group, Louis Bacon's Moore Global Investments, and Parvinder Thiara's Athanor Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as AMETEK, Inc. (NYSE:AME) but similarly valued. We will take a look at AmerisourceBergen Corporation (NYSE:ABC), Carvana Co. (NYSE:CVNA), Alexandria Real Estate Equities Inc (NYSE:ARE), Realty Income Corporation (NYSE:O), Hilton Worldwide Holdings Inc (NYSE:HLT), Rogers Communications Inc. (NYSE:RCI), and D.R. Horton, Inc. (NYSE:DHI). This group of stocks' market valuations resemble AME's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABC,40,646674,-1 CVNA,57,3587877,5 ARE,18,53382,-11 O,17,185310,-8 HLT,53,4467377,10 RCI,16,340545,0 DHI,66,2088308,1 Average,38.1,1624210,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1624 million. That figure was $953 million in AME's case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 16 bullish hedge fund positions. AMETEK, Inc. (NYSE:AME) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AME is 64. 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. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately AME wasn't nearly as popular as these 10 stocks and hedge funds that were betting on AME were disappointed as the stock returned 12.7% 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.
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Disclosure: None. This article was originally published at Insider Monkey.