Hedge Funds Are Nibbling On Ares Management Corp (ARES)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Ares Management Corp (NYSE:ARES) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Ares Management Corp (NYSE:ARES) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ARES shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 16 hedge funds in our database with ARES holdings at the end of March. Our calculations also showed that ARES isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind let’s go over the recent hedge fund action regarding Ares Management Corp (NYSE:ARES).

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

Heading into the third quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ARES over the last 24 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, HMI Capital was the largest shareholder of Ares Management Corp (NYSE:ARES), with a stake worth $365.1 million reported as of the end of June. Trailing HMI Capital was Junto Capital Management, which amassed a stake valued at $71.8 million. Royce & Associates, Millennium Management, and Balyasny Asset Management 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 HMI Capital allocated the biggest weight to Ares Management Corp (NYSE:ARES), around 11.43% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, setting aside 7.27 percent of its 13F equity portfolio to ARES.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in Ares Management Corp (NYSE:ARES). Balyasny Asset Management had $21.6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $13.5 million investment in the stock during the quarter. The other funds with brand new ARES positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Steve Cohen’s Point72 Asset Management, and Sander Gerber’s Hudson Bay Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ares Management Corp (NYSE:ARES) but similarly valued. We will take a look at Kirkland Lake Gold Ltd. (NYSE:KL), Opendoor Technologies Inc. (NASDAQ:OPEN), Owens Corning (NYSE:OC), East West Bancorp, Inc. (NASDAQ:EWBC), Targa Resources Corp (NYSE:TRGP), Asana Inc. (NYSE:ASAN), and Hubbell Incorporated (NYSE:HUBB). This group of stocks’ market values are closest to ARES’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $500 million. That figure was $686 million in ARES’s case. Opendoor Technologies Inc. (NASDAQ:OPEN) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 15 bullish hedge fund positions. Ares Management Corp (NYSE:ARES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ARES is 51.5. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on ARES as the stock returned 29.2% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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

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