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 PlayAGS, Inc. (NYSE:AGS).
Hedge fund interest in PlayAGS, Inc. (NYSE:AGS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AGS to other stocks including CorMedix Inc. (NYSE:CRMD), Titan International Inc (NYSE:TWI), and Asure Software Inc (NASDAQ:ASUR) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are perceived as unimportant, outdated investment tools of years past. While there are greater than 8000 funds with their doors open at present, Our researchers choose to focus on the upper echelon of this club, around 850 funds. These money managers administer most of the smart money's total asset base, and by monitoring their first-class stock picks, Insider Monkey has identified several investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated 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_338420" align="aligncenter" width="399"] Parag Vora of HG Vora Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. Keeping this in mind let's take a gander at the recent hedge fund action regarding PlayAGS, Inc. (NYSE:AGS).
Hedge fund activity in PlayAGS, Inc. (NYSE:AGS)
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in AGS a year ago. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, HG Vora Capital Management held the most valuable stake in PlayAGS, Inc. (NYSE:AGS), which was worth $9.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $1.5 million worth of shares. Millennium Management, Nantahala Capital Management, and Two Sigma Advisors 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 HG Vora Capital Management allocated the biggest weight to PlayAGS, Inc. (NYSE:AGS), around 0.9% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, setting aside 0.2 percent of its 13F equity portfolio to AGS.
Due to the fact that PlayAGS, Inc. (NYSE:AGS) has witnessed falling interest from hedge fund managers, it's safe to say that there were a few hedge funds that slashed their positions entirely heading into Q4. Intriguingly, Lee Ainslie's Maverick Capital dumped the biggest position of the "upper crust" of funds monitored by Insider Monkey, comprising close to $4.9 million in stock. Cliff Asness's fund, AQR Capital Management, also dropped its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as PlayAGS, Inc. (NYSE:AGS) but similarly valued. These stocks are CorMedix Inc. (NYSE:CRMD), Titan International Inc (NYSE:TWI), Asure Software Inc (NASDAQ:ASUR), and Denbury Resources Inc. (NYSE:DNR). All of these stocks' market caps resemble AGS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRMD,3,3558,-3 TWI,7,23029,-4 ASUR,9,17525,0 DNR,8,486,-4 Average,6.75,11150,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $16 million in AGS's case. Asure Software Inc (NASDAQ:ASUR) is the most popular stock in this table. On the other hand CorMedix Inc. (NYSE:CRMD) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks PlayAGS, Inc. (NYSE:AGS) is more popular among hedge funds. 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 returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on AGS as the stock returned 51.5% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.