Aqua Metals, Inc. (AQMS): Hedge Funds Are Snapping Up

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Aqua Metals, Inc. (NASDAQ:AQMS).

Is Aqua Metals, Inc. (NASDAQ:AQMS) a buy right now? Investors who are in the know were in a bullish mood. The number of long hedge fund positions advanced by 2 recently. Aqua Metals, Inc. (NASDAQ:AQMS) was in 5 hedge funds’ portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that AQMS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with AQMS positions at the end of the fourth quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to analyze the recent hedge fund action regarding Aqua Metals, Inc. (NASDAQ:AQMS).

Do Hedge Funds Think AQMS Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AQMS over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in Aqua Metals, Inc. (NASDAQ:AQMS), which was worth $3 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $0.6 million worth of shares. Citadel Investment Group, ExodusPoint Capital, and LMR Partners 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 ExodusPoint Capital allocated the biggest weight to Aqua Metals, Inc. (NASDAQ:AQMS), around 0.01% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, designating 0.0041 percent of its 13F equity portfolio to AQMS.

Consequently, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Aqua Metals, Inc. (NASDAQ:AQMS). Citadel Investment Group had $0.6 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Aqua Metals, Inc. (NASDAQ:AQMS) but similarly valued. We will take a look at Oramed Pharmaceuticals Inc. (NASDAQ:ORMP), The Cato Corporation (NYSE:CATO), Platinum Group Metals Limited (NYSE:PLG), Value Line, Inc. (NASDAQ:VALU), Vincerx Pharma, Inc. (NASDAQ:VINC), Cerecor Inc. (NASDAQ:CERC), and BioVie Inc. (NASDAQ:BIVI). This group of stocks’ market valuations are similar to AQMS’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $4 million in AQMS’s case. Vincerx Pharma, Inc. (NASDAQ:VINC) is the most popular stock in this table. On the other hand BioVie Inc. (NASDAQ:BIVI) is the least popular one with only 1 bullish hedge fund positions. Aqua Metals, Inc. (NASDAQ:AQMS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AQMS is 37. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately AQMS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AQMS investors were disappointed as the stock returned -22.7% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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

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