Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Apollo Global Management Inc (NYSE:APO).
Apollo Global Management Inc (NYSE:APO) was in 44 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. APO investors should pay attention to an increase in support from the world’s most elite money managers lately. There were 30 hedge funds in our database with APO holdings at the end of December. Our calculations also showed that APO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chase Coleman of Tiger Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Now let’s review the new hedge fund action surrounding Apollo Global Management Inc (NYSE:APO).
Do Hedge Funds Think APO Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from the fourth quarter of 2020. On the other hand, there were a total of 34 hedge funds with a bullish position in APO a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the largest position in Apollo Global Management Inc (NYSE:APO). Tiger Global Management LLC has a $1.6413 billion position in the stock, comprising 3.8% of its 13F portfolio. The second largest stake is held by Hawk Ridge Management, led by David Brown, holding a $85.1 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Ken Griffin’s Citadel Investment Group, David Rosen’s Rubric Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Incline Global Management allocated the biggest weight to Apollo Global Management Inc (NYSE:APO), around 7.23% of its 13F portfolio. Tiger Legatus Capital is also relatively very bullish on the stock, dishing out 6.22 percent of its 13F equity portfolio to APO.
Consequently, key hedge funds have jumped into Apollo Global Management Inc (NYSE:APO) headfirst. Rubric Capital Management, managed by David Rosen, initiated the most outsized position in Apollo Global Management Inc (NYSE:APO). Rubric Capital Management had $53.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $52.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeff Lignelli’s Incline Global Management, Alok Agrawal’s Bloom Tree Partners, and Curtis Schenker and Craig Effron’s Scoggin.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Apollo Global Management Inc (NYSE:APO) but similarly valued. We will take a look at Lear Corporation (NYSE:LEA), Credicorp Ltd. (NYSE:BAP), AGCO Corporation (NYSE:AGCO), Ozon Holdings PLC (NASDAQ:OZON), Steel Dynamics, Inc. (NASDAQ:STLD), Five Below Inc (NASDAQ:FIVE), and Iron Mountain Incorporated (NYSE:IRM). This group of stocks’ market caps are closest to APO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LEA | 23 | 1217537 | -13 |
| BAP | 22 | 236121 | 7 |
| AGCO | 36 | 552596 | -4 |
| OZON | 17 | 136135 | -4 |
| STLD | 26 | 570961 | -1 |
| FIVE | 43 | 1010018 | 1 |
| IRM | 16 | 56371 | -2 |
| Average | 26.1 | 539963 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $540 million. That figure was $2362 million in APO’s case. Five Below Inc (NASDAQ:FIVE) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Apollo Global Management Inc (NYSE:APO) is more popular among hedge funds. Our overall hedge fund sentiment score for APO is 90. 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 returned 17.4% in 2021 through June 18th but still managed to beat the market by 6.1 percentage points. Hedge funds were also right about betting on APO as the stock returned 23.1% since the end of March (through 6/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
