Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees during the first half of 2019 amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the second quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Athene Holding Ltd. (NYSE:ATH).
Is Athene Holding Ltd. (NYSE:ATH) a healthy stock for your portfolio? Prominent investors are in an optimistic mood. The number of bullish hedge fund bets increased by 4 recently. Our calculations also showed that ATH isn’t among the 30 most popular stocks among hedge funds (see the video below). ATH was in 39 hedge funds’ portfolios at the end of June. There were 35 hedge funds in our database with ATH positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a gander at the fresh hedge fund action surrounding Athene Holding Ltd. (NYSE:ATH).
How have hedgies been trading Athene Holding Ltd. (NYSE:ATH)?
Heading into the third quarter of 2019, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the first quarter of 2019. On the other hand, there were a total of 36 hedge funds with a bullish position in ATH a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Athene Holding Ltd. (NYSE:ATH), which was worth $226 million at the end of the second quarter. On the second spot was Samlyn Capital which amassed $174.2 million worth of shares. Moreover, Brahman Capital, GLG Partners, and GMT Capital were also bullish on Athene Holding Ltd. (NYSE:ATH), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds have been driving this bullishness. Viking Global, managed by Andreas Halvorsen, created the largest position in Athene Holding Ltd. (NYSE:ATH). Viking Global had $66.9 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also initiated a $27 million position during the quarter. The other funds with new positions in the stock are James Dinan’s York Capital Management, Usman Waheed’s Strycker View Capital, and Michael Kharitonov and Jon David McAuliffe’s Voleon Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Athene Holding Ltd. (NYSE:ATH) but similarly valued. These stocks are LKQ Corporation (NASDAQ:LKQ), Guidewire Software Inc (NYSE:GWRE), ICON Public Limited Company (NASDAQ:ICLR), and Woori Financial Group Inc. (NYSE:WF). This group of stocks’ market values are similar to ATH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LKQ | 45 | 955700 | 2 |
| GWRE | 22 | 691982 | -4 |
| ICLR | 19 | 828062 | -8 |
| WF | 1 | 1327 | 0 |
| Average | 21.75 | 619268 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $619 million. That figure was $1353 million in ATH’s case. LKQ Corporation (NASDAQ:LKQ) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 1 bullish hedge fund positions. Athene Holding Ltd. (NYSE:ATH) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ATH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ATH were disappointed as the stock returned -2.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
