In this article we will take a look at whether hedge funds think Ameriprise Financial, Inc. (NYSE:AMP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Ameriprise Financial, Inc. (NYSE:AMP) investors should be aware of a decrease in hedge fund interest of late. Our calculations also showed that AMP isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the new hedge fund action encompassing Ameriprise Financial, Inc. (NYSE:AMP).
How are hedge funds trading Ameriprise Financial, Inc. (NYSE:AMP)?
Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMP over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ameriprise Financial, Inc. (NYSE:AMP) was held by Lyrical Asset Management, which reported holding $212.2 million worth of stock at the end of September. It was followed by AQR Capital Management with a $140.5 million position. Other investors bullish on the company included GLG Partners, Citadel Investment Group, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Lyrical Asset Management allocated the biggest weight to Ameriprise Financial, Inc. (NYSE:AMP), around 5.21% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 1.13 percent of its 13F equity portfolio to AMP.
Seeing as Ameriprise Financial, Inc. (NYSE:AMP) has faced a decline in interest from the smart money, logic holds that there lies a certain “tier” of fund managers that slashed their positions entirely last quarter. Intriguingly, Louis Bacon’s Moore Global Investments dumped the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at about $20.8 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund sold off about $4.6 million worth. These moves are important to note, as total hedge fund interest dropped by 11 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ameriprise Financial, Inc. (NYSE:AMP) but similarly valued. These stocks are Aptiv PLC (NYSE:APTV), Hewlett Packard Enterprise Company (NYSE:HPE), Twilio Inc. (NYSE:TWLO), and TransUnion (NYSE:TRU). This group of stocks’ market valuations are closest to AMP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APTV | 33 | 679352 | -13 |
| HPE | 29 | 641977 | -12 |
| TWLO | 52 | 1549546 | -8 |
| TRU | 44 | 895453 | 7 |
| Average | 39.5 | 941582 | -6.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.5 hedge funds with bullish positions and the average amount invested in these stocks was $942 million. That figure was $606 million in AMP’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Hewlett Packard Enterprise Company (NYSE:HPE) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Ameriprise Financial, Inc. (NYSE:AMP) is even less popular than HPE. Hedge funds clearly dropped the ball on AMP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AMP as the stock returned 37.8% so far in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
