Is AFC Gamma, Inc. (AFCG) A Good Stock To Buy?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was AFC Gamma, Inc. (NASDAQ:AFCG).

Is AFCG a good stock to buy? Investors who are in the know were getting more bullish. The number of bullish hedge fund positions increased by 5 in recent months. AFC Gamma, Inc. (NASDAQ:AFCG) was in 5 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that AFCG 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.

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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. Keeping this in mind we’re going to go over the latest hedge fund action regarding AFC Gamma, Inc. (NASDAQ:AFCG).

Do Hedge Funds Think AFCG Is A Good Stock To Buy Now?

At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5 from the previous quarter. The graph below displays the number of hedge funds with bullish position in AFCG over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in AFC Gamma, Inc. (NASDAQ:AFCG). Millennium Management has a $6.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Millennium Management’s heels is Rima Senvest Management, led by Richard Mashaal, holding a $3.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of Paul Tudor Jones’s Tudor Investment Corp, Dmitry Balyasny’s Balyasny Asset Management and Simon Sadler’s Segantii Capital. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to AFC Gamma, Inc. (NASDAQ:AFCG), around 0.12% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to AFCG.

As industrywide interest jumped, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in AFC Gamma, Inc. (NASDAQ:AFCG). Millennium Management had $6.3 million invested in the company at the end of the quarter. Richard Mashaal’s Rima Senvest Management also initiated a $3.7 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Dmitry Balyasny’s Balyasny Asset Management, and Simon Sadler’s Segantii Capital.

Let’s check out hedge fund activity in other stocks similar to AFC Gamma, Inc. (NASDAQ:AFCG). We will take a look at Esports Entertainment Group Inc. (NASDAQ:GMBL), Nathan’s Famous, Inc. (NASDAQ:NATH), Akumin Inc. (NASDAQ:AKU), X Financial (NYSE:XYF), Atlantic Power Corp (NYSE:AT), Ciner Resources LP (NYSE:CINR), and RedHill Biopharma Ltd (NASDAQ:RDHL). All of these stocks’ market caps resemble AFCG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $15 million in AFCG’s case. Atlantic Power Corp (NYSE:AT) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. AFC Gamma, Inc. (NASDAQ:AFCG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AFCG is 26. 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 gained 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on AFCG, though not to the same extent, as the stock returned 6.6% since the end of Q1 (through June 18th) and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.