Hedge Funds Are Nibbling On Ameriprise Financial, Inc. (AMP)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Ameriprise Financial, Inc. (NYSE:AMP) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Ameriprise Financial, Inc. (NYSE:AMP) investors should pay attention to an increase in hedge fund interest of late. Ameriprise Financial, Inc. (NYSE:AMP) was in 28 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 39. Our calculations also showed that AMP isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind let’s take a look at the recent hedge fund action surrounding Ameriprise Financial, Inc. (NYSE:AMP).

How have hedgies been trading Ameriprise Financial, Inc. (NYSE:AMP)?

At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AMP over the last 20 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, Lyrical Asset Management was the largest shareholder of Ameriprise Financial, Inc. (NYSE:AMP), with a stake worth $286.1 million reported as of the end of September. Trailing Lyrical Asset Management was AQR Capital Management, which amassed a stake valued at $150.7 million. GLG Partners, Millennium Management, and Arrowstreet Capital 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 Lyrical Asset Management allocated the biggest weight to Ameriprise Financial, Inc. (NYSE:AMP), around 5.64% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, designating 1.59 percent of its 13F equity portfolio to AMP.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Mangrove Partners, managed by Nathaniel August, initiated the most valuable position in Ameriprise Financial, Inc. (NYSE:AMP). Mangrove Partners had $6.5 million invested in the company at the end of the quarter. Ryan Caldwell’s Chiron Investment Management also initiated a $4.4 million position during the quarter. The other funds with brand new AMP positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Greg Eisner’s Engineers Gate Manager, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Ameriprise Financial, Inc. (NYSE:AMP). We will take a look at MPLX LP (NYSE:MPLX), Nutrien Ltd. (NYSE:NTR), Citrix Systems, Inc. (NASDAQ:CTXS), First Republic Bank (NYSE:FRC), Paycom Software Inc (NYSE:PAYC), Yum China Holdings, Inc. (NYSE:YUMC), and DISH Network Corp. (NASDAQ:DISH). This group of stocks’ market values are closest to AMP’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $865 million. That figure was $707 million in AMP’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 13 bullish hedge fund positions. Ameriprise Financial, Inc. (NYSE:AMP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMP is 46.8. 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. 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 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately AMP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AMP investors were disappointed as the stock returned -1.5% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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