At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards AgroFresh Solutions Inc (NASDAQ:AGFS).
AgroFresh Solutions Inc (NASDAQ:AGFS) investors should pay attention to a decrease in hedge fund interest lately. Our calculations also showed that AGFS 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.
In the eyes of most traders, hedge funds are seen as underperforming, old investment tools of years past. While there are over 8000 funds with their doors open at the moment, We hone in on the moguls of this club, approximately 850 funds. These money managers orchestrate most of all hedge funds' total asset base, and by tracking their best equity investments, Insider Monkey has brought to light a number of investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_189632" align="aligncenter" width="400"] David Harding of Winton Capital 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 let's take a peek at the latest hedge fund action regarding AgroFresh Solutions Inc (NASDAQ:AGFS).
What have hedge funds been doing with AgroFresh Solutions Inc (NASDAQ:AGFS)?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AGFS over the last 18 quarters. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the most valuable position in AgroFresh Solutions Inc (NASDAQ:AGFS). Renaissance Technologies has a $0.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish contain Israel Englander's Millennium Management, David Harding's Winton Capital Management and Matthew Halbower's Pentwater Capital Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to AgroFresh Solutions Inc (NASDAQ:AGFS), around 0.0026% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0008 percent of its 13F equity portfolio to AGFS.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: ExodusPoint Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified AGFS as a viable investment and initiated a position in the stock.
Let's also examine hedge fund activity in other stocks similar to AgroFresh Solutions Inc (NASDAQ:AGFS). These stocks are Cedar Realty Trust Inc (NYSE:CDR), ESSA Pharma Inc. (NASDAQ:EPIX), Checkpoint Therapeutics, Inc. (NASDAQ:CKPT), and Atento SA (NYSE:ATTO). All of these stocks' market caps are closest to AGFS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDR,9,4554,1 EPIX,4,27728,-1 CKPT,3,157,1 ATTO,6,509,0 Average,5.5,8237,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $1 million in AGFS's case. Cedar Realty Trust Inc (NYSE:CDR) is the most popular stock in this table. On the other hand Checkpoint Therapeutics, Inc. (NASDAQ:CKPT) is the least popular one with only 3 bullish hedge fund positions. AgroFresh Solutions Inc (NASDAQ:AGFS) is not the least popular stock in this group but hedge fund interest is still below 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AGFS as the stock returned 62.2% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.