Is Altisource Portfolio Solutions (ASPS) A Good Investment?

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 Altisource Portfolio Solutions S.A. (NASDAQ:ASPS).

Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) has experienced a decrease in hedge fund sentiment lately. Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 17. Our calculations also showed that ASPS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

David E. Shaw of D.E. Shaw

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $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. With all of this in mind let’s take a look at the recent hedge fund action encompassing Altisource Portfolio Solutions S.A. (NASDAQ:ASPS).

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

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the fourth quarter of 2020. By comparison, 8 hedge funds held shares or bullish call options in ASPS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) was held by Renaissance Technologies, which reported holding $6.7 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $0.4 million position. The only other hedge fund that is bullish on the company was D E Shaw.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified ASPS as a viable investment and initiated a position in the stock.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) but similarly valued. We will take a look at Protalix BioTherapeutics Inc. (NYSE:PLX), Avinger Inc (NASDAQ:AVGR), Summit Midstream Partners LP (NYSE:SMLP), Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL), Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), Ayala Pharmaceuticals, Inc. (NASDAQ:AYLA), and Apollo Endosurgery, Inc. (NASDAQ:APEN). This group of stocks’ market values are similar to ASPS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $8 million in ASPS’s case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ASPS is 17. 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 negative signal and 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately ASPS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ASPS investors were disappointed as the stock returned -22.3% since the end of March (through 6/11) 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 most of these stocks already outperformed the market in 2021.

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