Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Amerisafe, Inc. (NASDAQ:AMSF).
Amerisafe, Inc. (NASDAQ:AMSF) was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. AMSF shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 11 hedge funds in our database with AMSF positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Green Dot Corporation (NYSE:GDOT), Genesco Inc. (NYSE:GCO), and Knoll Inc (NYSE:KNL) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading Amerisafe, Inc. (NASDAQ:AMSF)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 27% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in AMSF heading into this year. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the largest position in Amerisafe, Inc. (NASDAQ:AMSF), worth close to $7.1 million. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $2.7 million position. Some other hedge funds and institutional investors that hold long positions comprise John Overdeck and David Siegel’s Two Sigma Advisors, Jim Simons’ Renaissance Technologies, one of the largest hedge funds in the world, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Amerisafe, Inc. (NASDAQ:AMSF) has sustained falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of funds that elected to cut their full holdings last quarter. Interestingly, Paul Tudor Jones’ Tudor Investment Corp sold off the biggest stake of the “upper crust” of funds monitored by Insider Monkey, valued at close to $0.6 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dumped about $0.3 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Amerisafe, Inc. (NASDAQ:AMSF). These stocks are Green Dot Corporation (NYSE:GDOT), Genesco Inc. (NYSE:GCO), Knoll Inc (NYSE:KNL), and Frontline Ltd (NYSE:FRO). This group of stocks’ market caps are closest to AMSF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GDOT | 17 | 180354 | -2 |
| GCO | 13 | 64533 | 2 |
| KNL | 16 | 48056 | -4 |
| FRO | 9 | 8674 | -2 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $18 million in AMSF’s case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand Frontline Ltd (NYSE:FRO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Amerisafe, Inc. (NASDAQ:AMSF) is even less popular than FRO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
