In this article, we discuss the 10 stocks better than AMC according to hedge funds. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks Better than AMC According to Hedge Funds.
Stocks that offer little in terms of basic fundamentals but have become popular based on interest from retail investors have exploded in value over the past few months. AMC Entertainment Holdings, Inc. (NYSE: AMC), the Kansas-based entertainment firm, is one such equity. The stock has been the subject of a short squeeze – the short interest on the stock remains high at close to 19% – but short-sellers have suffered losses of almost $4.5 billion so far this year in betting against the company, according to data from analytics firm S3 Partners.
AMC Entertainment Holdings, Inc. (NYSE: AMC) has had a mixed year so far, missing market estimates on revenue and earnings per share in the first quarter but beating them in the second quarter. The company remains on top of an S3 Partners list of stocks that short sellers might be tempted to cash in on. At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $404 million in AMC Entertainment Holdings, Inc. (NYSE:AMC), up from 19 in the preceding quarter worth $34 million.
Some of the stocks that investors should look towards instead of AMC Entertainment Holdings, Inc. (NYSE: AMC) include Workday, Inc. (NASDAQ: WDAY), Analog Devices, Inc. (NASDAQ:ADI), and Bausch Health Companies Inc. (NYSE: BHC), among others. The company still faces an uphill battle in increasing revenue. According to a report presented at a cinema forum in Dubai, the global cinema industry is expected to remain behind 2019 levels for another three years, with a full recovery not expected until 2024.
This will make it even harder for AMC Entertainment Holdings, Inc. (NYSE: AMC) to create shareholder value in the next few years. Market experts believe that initiating a short squeeze on the stock will also be a little difficult because of the increased share count. As the firm burns through available cash without increasing revenue, a crash seems more and more likely. In addition, as cinema attendances in the US continue to decline, as they have been since 2002, it is possible the firm will not return to pre-pandemic numbers at all. The firm has a long-term debt of around $5.4 billion, enough to sustain the firm into 2022 at the present cash burn rate unless it innovates.
The influx of retail investors on the market and the rise of AMC has baffled market experts. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Our Methodology
With this context in mind, here is our list of the 10 stocks better than AMC according to hedge funds. These stocks were picked from a database of 873 hedge funds and their holdings tracked by Insider Monkey. The list is ranked according to the number of hedge funds having stakes in each firm.
Only those firms that rank higher than AMC in our database and have seen an increase in the number of hedge funds having stakes in them at the end of the second quarter of 2021, as compared to the filings for the first quarter of the year, were selected.
Our criteria selects stocks whose hedge fund sentiment is better than that of AMC and which have positive analyst ratings and long-term growth catalysts.
The basic business fundamentals and analyst ratings of each stock are also discussed to provide readers with some more context for their investment decisions.
Stocks Better than AMC According to Hedge Funds
10. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 21
Upstart Holdings, Inc. (NASDAQ:UPST) is placed tenth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. (NYSE:AMC) according to hedge funds. The firm owns and runs a cloud-based lending platform that uses artificial intelligence. It is headquartered in California.
On September 20, investment advisory Barclays maintained an Overweight rating on Upstart Holdings, Inc. (NASDAQ:UPST) stock and raised the price target to $345 from $230. Ramsey El-Assal, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Upstart Holdings, Inc. (NASDAQ:UPST), up from 13 the preceding quarter worth $1.7 billion.
Just like Workday, Inc. (NASDAQ:WDAY), Analog Devices, Inc. (NASDAQ:ADI), and Bausch Health Companies Inc. (NYSE:BHC), Upstart Holdings, Inc. (NASDAQ:UPST) is one of the stocks attracting the attention of elite investors.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
9. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 40
Ovintiv Inc. (NYSE:OVV) is ranked ninth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. (NYSE:AMC) according to hedge funds. The company has interests in the mining sector and is headquartered in Colorado.
On August 17, investment advisory Bank of America reinstated coverage of Ovintiv Inc. (NYSE:OVV) stock with a Buy rating and a price target of $38, noting that the firm had a “line of sight” on debt reduction that would transfer value to the equity.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Ovintiv Inc. (NYSE:OVV) with 3.9 million shares worth more than $123 million.
In addition to Workday, Inc. (NASDAQ:WDAY), Analog Devices, Inc. (NASDAQ:ADI), and Bausch Health Companies Inc. (NYSE:BHC), Ovintiv Inc. (NYSE:OVV) is one of the stocks attracting the attention of hedge funds.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Ovintiv Inc. (NYSE:OVV) was one of them. Here is what the fund said:
“Energy holdings in Ovintiv also experienced detracted performance, as oil demand collapsed due to the pandemic. With approximately 70% of oil demand used for transportation, the decline in miles driven (i.e., U.S. miles driven are down 11% in 2020) and the far bigger 60–70% decline in global air passenger traffic led to a dramatic drop in oil prices.
It is our expectation that oil demand will remain weak for the foreseeable future, as flying and driving slowly recover, and that over the long term, electric vehicles and renewable energy will also decrease demand for fossil fuels. As a result, we sold out of our energy positions in 2020. We redeployed the assets in other sectors such as financial services that also saw falling stock prices, but where we had stronger conviction that the long-term health of their business was strong.”
8. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 43
The Mosaic Company (NYSE:MOS) is a Florida-based company that produces and markets crop nutrients. It is placed eighth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. (NYSE:AMC) according to hedge funds.
On August 20, investment advisory HSBC upgraded The Mosaic Company (NYSE:MOS) stock to Buy from Hold and raised the price target to $39 from $37, noting the firm would benefit from strong fertilizer prices in the second half of 2021.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $808 million in The Mosaic Company (NYSE:MOS), up from 38 in the preceding quarter worth $944 million.
In its Q1 2021 investor letter, Appleseed Fund, an asset management firm, highlighted a few stocks and The Mosaic Company (NYSE:MOS) was one of them. Here is what the fund said:
“Our most significant contributors to the Fund’s equity performance during the quarter (includes) Mosaic Company (MOS). As for Mosaic, its share price has risen in sympathy with increasing grain prices, which should stimulate additional farmer investment into improving crop yields.”
7. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 43
Chewy, Inc. (NYSE:CHWY) is a Florida-based firm that owns and runs an ecommerce platform specializing in pet products. It is ranked seventh on our list of 10 stocks better than AMC Entertainment Holdings, Inc. (NYSE:AMC) according to hedge funds.
On September 26, investment advisory Credit Suisse assumed coverage of Chewy, Inc. (NYSE:CHWY) stock with an Outperform rating and a price target of $121. Rick Patel, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Chewy, Inc. (NYSE:CHWY) with 1.4 million shares worth more than $115 million.
Workday, Inc. (NASDAQ:WDAY), Analog Devices, Inc. (NASDAQ:ADI), and Bausch Health Companies Inc. (NYSE:BHC) are some of the top stocks to buy right now, just like Chewy, Inc. (NYSE:CHWY).
In its Q4 2020 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Chewy, Inc. (NYSE:CHWY) was one of them. Here is what the fund said:
“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.
Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.
In addition to one-time sales, Chewy is creating a recurring revenue model through its “autoship” program. This is essentially a subscription service for products that are sent at intervals specified by customers and includes such items as food and medicine. Customers are more profitable the longer they stay with the company, as their “lifetime value” grows. The company is organized around providing an exceptional customer experience. Chewy has 10 fulfillment centers scattered across the US, which enable cost-efficient overnight shipments to about 80% of the U.S. population and cost-efficient two-day shipments to nearly 100%. This allows Chewy to provide excellent service to the company’s more than 12.7 million active users.
Chewy’s ability operate profitably in the future hinges on two key variables: growing its customer base and more efficiently managing its fulfillment costs through automation of its fulfillment centers, thereby decreasing labor costs. Chewy has a smart, experienced management team and the company is expected to become profitable at the end of this fiscal year.”
6. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 43
Teladoc Health, Inc. (NYSE:TDOC) is placed sixth on our list of 10 stocks better than AMC Entertainment Holdings, Inc. (NYSE:AMC) according to hedge funds. The firm markets virtual healthcare services and is headquartered in New York.
On July 28, investment advisory BTIG maintained a Buy rating on Teladoc Health, Inc. (NYSE:TDOC) stock but lowered the price target to $260 from $300, noting that the guidance and organic revenue growth of the firm were “excellent” but there were concerns around 2022 membership growth.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Teladoc Health, Inc. (NYSE:TDOC), up from 42 in the previous quarter worth $3.3 billion.
Workday, Inc. (NASDAQ:WDAY), Analog Devices, Inc. (NASDAQ:ADI), and Bausch Health Companies Inc. (NYSE:BHC) are some of the best stocks to buy right now, along with Teladoc Health, Inc. (NYSE:TDOC).
In its Q4 2020 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE:TDOC) was one of them. Here is what the fund said:
“Teladoc Health offers remote physician access to patients at home. After experiencing incredible levels of growth throughout the early stages of the pandemic as its unique value proposition rose to the forefront of the healthcare industry, the firm’s shares cooled off a bit as optimistic vaccine data slightly curtailed investor expectations for the firm’s future growth potential. We sold the stock.”
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Disclosure. None. 10 Stocks Better than AMC According to Hedge Funds is originally published on Insider Monkey.
