You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is AAC Holdings Inc (NYSE:AAC) a splendid investment now? The best stock pickers are categorically becoming less confident. The number of bullish hedge fund bets that are revealed through 13F filings experienced a decline of 1 recently. AAC was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 7 hedge funds in our database with AAC holdings at the end of the second quarter. 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 Genesis Healthcare Inc (NYSE:GEN), YRC Worldwide, Inc. (NASDAQ:YRCW), and Blue Hills Bancorp Inc (NASDAQ:BHBK) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading AAC Holdings Inc (NYSE:AAC)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 14% drop from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in AAC at the end of Q3 2015, which has since crumbled by more than half. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, James E. Flynn’s Deerfield Management has the biggest position in AAC Holdings Inc (NYSE:AAC), worth close to $38.1 million, accounting for 1.8% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, one of the 10 largest hedge funds in the world; with a $4.3 million position. Some other hedge funds and institutional investors that hold long positions encompass Charles Paquelet’s Skylands Capital, James Dondero’s Highland Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that got rid of their entire stakes in the stock during the third quarter. Interestingly, Steve Cohen’s Point72 Asset Management got rid of the largest stake of the 700 funds studied by Insider Monkey, worth close to $1.5 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.5 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AAC Holdings Inc (NYSE:AAC) but similarly valued. We will take a look at Genesis Healthcare Inc (NYSE:GEN), YRC Worldwide, Inc. (NASDAQ:YRCW), Blue Hills Bancorp Inc (NASDAQ:BHBK), and GP Strategies Corporation (NYSE:GPX). All of these stocks’ market caps are closest to AAC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GEN | 5 | 2172 | -1 |
| YRCW | 19 | 112255 | -1 |
| BHBK | 14 | 48076 | -2 |
| GPX | 13 | 137563 | 3 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $47 million in AAC’s case. YRC Worldwide, Inc. (NASDAQ:YRCW) is the most popular stock in this table. On the other hand Genesis Healthcare Inc (NYSE:GEN) is the least popular one with only 5 bullish hedge fund positions. AAC Holdings Inc (NYSE:AAC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard YRCW might be a better candidate to consider taking a long position in.
Disclosure: None
