We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards APi Group Corporation (NYSE:APG) and determine whether hedge funds skillfully traded this stock.
APi Group Corporation (NYSE:APG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that APG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Agree Realty Corporation (NYSE:ADC), Armstrong World Industries, Inc. (NYSE:AWI), and Selective Insurance Group (NASDAQ:SIGI) to gather more data points.
Michael Price of MFP 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 analyze the recent hedge fund action regarding APi Group Corporation (NYSE:APG).
Do Hedge Funds Think APG Is A Good Stock To Buy Now?
At Q3’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in APG over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in APi Group Corporation (NYSE:APG), which was worth $678.3 million at the end of the third quarter. On the second spot was Empyrean Capital Partners which amassed $103.7 million worth of shares. Permian Investment Partners, Senator Investment Group, and ADW 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 ADW Capital allocated the biggest weight to APi Group Corporation (NYSE:APG), around 19.45% of its 13F portfolio. Lionstone Capital Management is also relatively very bullish on the stock, designating 10.79 percent of its 13F equity portfolio to APG.
Because APi Group Corporation (NYSE:APG) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds who were dropping their entire stakes in the third quarter. It’s worth mentioning that Renaissance Technologies said goodbye to the biggest stake of the 750 funds tracked by Insider Monkey, worth an estimated $8.6 million in stock. David Einhorn’s fund, Greenlight Capital, also dumped its stock, about $5.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to APi Group Corporation (NYSE:APG). These stocks are Agree Realty Corporation (NYSE:ADC), Armstrong World Industries, Inc. (NYSE:AWI), Selective Insurance Group (NASDAQ:SIGI), RLI Corp. (NYSE:RLI), Park Hotels & Resorts Inc. (NYSE:PK), Q2 Holdings Inc (NYSE:QTWO), and Flowserve Corporation (NYSE:FLS). This group of stocks’ market values resemble APG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADC | 20 | 155884 | 2 |
| AWI | 22 | 480178 | 5 |
| SIGI | 14 | 27641 | 0 |
| RLI | 18 | 192378 | 3 |
| PK | 22 | 201657 | 3 |
| QTWO | 20 | 178149 | 1 |
| FLS | 21 | 199851 | -6 |
| Average | 19.6 | 205105 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $205 million. That figure was $1332 million in APG’s case. Armstrong World Industries, Inc. (NYSE:AWI) is the most popular stock in this table. On the other hand Selective Insurance Group (NASDAQ:SIGI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks APi Group Corporation (NYSE:APG) is more popular among hedge funds. Our overall hedge fund sentiment score for APG is 85. 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 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on APG as the stock returned 9.6% since the end of September (through 1/31) 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.
Follow Api Group Corp (NYSE:APG)
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Disclosure: None. This article was originally published at Insider Monkey.
