We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Ames National Corporation (NASDAQ:ATLO).
Ames National Corporation (NASDAQ:ATLO) has experienced an increase in hedge fund interest in recent months. Ames National Corporation (NASDAQ:ATLO) was in 4 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ATLO isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
To the average investor there are tons of indicators market participants use to size up their holdings. A pair of the best indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can outpace the market by a very impressive amount (see the details here).
Chuck Royce of Royce & Associates
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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 we're going to view the latest hedge fund action regarding Ames National Corporation (NASDAQ:ATLO).
How have hedgies been trading Ames National Corporation (NASDAQ:ATLO)?
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ATLO over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Royce & Associates, managed by Chuck Royce, holds the largest position in Ames National Corporation (NASDAQ:ATLO). Royce & Associates has a $3.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Alexander Medina Seaver of Stadium Capital Management, with a $3 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish encompass Renaissance Technologies, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Stadium Capital Management allocated the biggest weight to Ames National Corporation (NASDAQ:ATLO), around 1.44% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to ATLO.
Consequently, key money managers have jumped into Ames National Corporation (NASDAQ:ATLO) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Ames National Corporation (NASDAQ:ATLO). Millennium Management had $0.6 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to Ames National Corporation (NASDAQ:ATLO). These stocks are Steel Partners Holdings LP (NYSE:SPLP), VolitionRX Limited (NYSE:VNRX), Fennec Pharmaceuticals Inc. (NASDAQ:FENC), Cherry Hill Mortgage Investment Corp (NYSE:CHMI), AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), Standard AVB Financial Corp. (NASDAQ:STND), and Exicure, Inc. (NASDAQ:XCUR). This group of stocks' market valuations resemble ATLO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPLP,4,12895,1 VNRX,2,221,-2 FENC,6,56441,-1 CHMI,8,17876,-2 AVEO,8,7851,-5 STND,3,8593,2 XCUR,11,21812,2 Average,6,17956,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $10 million in ATLO's case. Exicure, Inc. (NASDAQ:XCUR) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 2 bullish hedge fund positions. Ames National Corporation (NASDAQ:ATLO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ATLO is 47.1. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on ATLO as the stock returned 31.9% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.