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 AMC Networks Inc (NASDAQ:AMCX).
AMC Networks Inc (NASDAQ:AMCX) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. AMC Networks Inc (NASDAQ:AMCX) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that AMCX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Mario Gabelli of GAMCO Investors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to check out the latest hedge fund action encompassing AMC Networks Inc (NASDAQ:AMCX).
Do Hedge Funds Think AMCX Is A Good Stock To Buy Now?
At third quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the second quarter of 2021. By comparison, 28 hedge funds held shares or bullish call options in AMCX a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Stephen Mildenhall’s Contrarius Investment Management has the number one position in AMC Networks Inc (NASDAQ:AMCX), worth close to $92.2 million, corresponding to 4.7% of its total 13F portfolio. Coming in second is GAMCO Investors, led by Mario Gabelli, holding a $20.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of D. E. Shaw’s D E Shaw, Jamie Zimmerman’s Litespeed Management and Murray Stahl’s Horizon Asset Management. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to AMC Networks Inc (NASDAQ:AMCX), around 7.9% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, dishing out 4.73 percent of its 13F equity portfolio to AMCX.
As one would reasonably expect, key money managers were breaking ground themselves. Litespeed Management, managed by Jamie Zimmerman, initiated the most valuable position in AMC Networks Inc (NASDAQ:AMCX). Litespeed Management had $7.2 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $2.8 million position during the quarter. The following funds were also among the new AMCX investors: Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Eisner’s Engineers Gate Manager.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AMC Networks Inc (NASDAQ:AMCX) but similarly valued. These stocks are Delek Logistics Partners LP (NYSE:DKL), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), AST SpaceMobile Inc. (NASDAQ:ASTS), Vector Group Ltd (NYSE:VGR), Encore Wire Corporation (NASDAQ:WIRE), KAR Auction Services Inc (NYSE:KAR), and Veritex Holdings Inc (NASDAQ:VBTX). This group of stocks’ market caps resemble AMCX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DKL | 1 | 939 | -2 |
| SBCF | 12 | 34029 | 1 |
| ASTS | 12 | 48915 | -3 |
| VGR | 18 | 146987 | 4 |
| WIRE | 21 | 116411 | 1 |
| KAR | 26 | 343456 | 3 |
| VBTX | 10 | 59199 | 1 |
| Average | 14.3 | 107134 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $159 million in AMCX’s case. KAR Auction Services Inc (NYSE:KAR) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. AMC Networks Inc (NASDAQ:AMCX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMCX is 76.6. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately AMCX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AMCX were disappointed as the stock returned -16.6% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.
Follow Amc Networks Inc. (NASDAQ:AMCX)
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Disclosure: None. This article was originally published at Insider Monkey.
