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Where Do Hedge Funds Stand On Associated Capital Group, Inc. (AC)?

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Asma UL Husna
·6 min read
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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Associated Capital Group, Inc. (NYSE:AC) in this article.

Hedge fund interest in Associated Capital Group, Inc. (NYSE:AC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AC 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). At the end of this article we will also compare AC to other stocks including Endurance International Group Holdings Inc (NASDAQ:EIGI), Southside Bancshares, Inc. (NASDAQ:SBSI), and Provident Financial Services, Inc. (NYSE:PFS) to get a better sense of its popularity.

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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.

OMEGA ADVISORS
OMEGA ADVISORS

Leon Cooperman of Omega Advisors

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 15 best blue chip stocks 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a glance at the latest hedge fund action encompassing Associated Capital Group, Inc. (NYSE:AC).

How have hedgies been trading Associated Capital Group, Inc. (NYSE:AC)?

At Q3's end, a total of 5 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 6 hedge funds with a bullish position in AC a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Horizon Asset Management, managed by Murray Stahl, holds the biggest position in Associated Capital Group, Inc. (NYSE:AC). Horizon Asset Management has a $50.3 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, managed by Mario Gabelli, which holds a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism contain Renaissance Technologies, Chuck Royce's Royce & Associates and Leon Cooperman's Omega Advisors. In terms of the portfolio weights assigned to each position Horizon Asset Management allocated the biggest weight to Associated Capital Group, Inc. (NYSE:AC), around 2.02% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to AC.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's now review hedge fund activity in other stocks similar to Associated Capital Group, Inc. (NYSE:AC). We will take a look at Endurance International Group Holdings Inc (NASDAQ:EIGI), Southside Bancshares, Inc. (NASDAQ:SBSI), Provident Financial Services, Inc. (NYSE:PFS), Pliant Therapeutics, Inc. (NASDAQ:PLRX), National Bank Holdings Corp (NYSE:NBHC), Taysha Gene Therapies, Inc. (NASDAQ:TSHA), and ATN International, Inc. (NASDAQ:ATNI). This group of stocks' market valuations are closest to AC's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EIGI,16,95183,1 SBSI,8,31525,-3 PFS,10,18111,0 PLRX,11,157744,-2 NBHC,6,45405,1 TSHA,15,72542,15 ATNI,9,47619,1 Average,10.7,66876,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $56 million in AC's case. Endurance International Group Holdings Inc (NASDAQ:EIGI) is the most popular stock in this table. On the other hand National Bank Holdings Corp (NYSE:NBHC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Associated Capital Group, Inc. (NYSE:AC) is even less popular than NBHC. Our overall hedge fund sentiment score for AC is 23.8. 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. Hedge funds dodged a bullet by taking a bearish stance towards AC. Our calculations showed that the top 20 most popular hedge fund stocks 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 but managed to beat the market again by 16.1 percentage points. Unfortunately AC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AC investors were disappointed as the stock returned 6.6% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.

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