Is Ameriprise Financial, Inc. (AMP) A Good Stock To Buy?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Ameriprise Financial, Inc. (NYSE:AMP) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. AMP was in 29 hedge funds’ portfolios at the end of the third quarter of 2016. There were 32 hedge funds in our database with AMP positions at the end of the previous 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 FirstEnergy Corp. (NYSE:FE), NetEase, Inc (ADR) (NASDAQ:NTES), and Workday Inc (NYSE:WDAY) 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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Now, let’s go over the recent action encompassing Ameriprise Financial, Inc. (NYSE:AMP).

Hedge fund activity in Ameriprise Financial, Inc. (NYSE:AMP)

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, down 9% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Ameriprise Financial, Inc. (NYSE:AMP), worth close to $77.7 million and comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is David E Shaw’s D E Shaw, which holds a $67.3 million Stake; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions consist of Dmitry Balyasny’s Balyasny Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Gregg Moskowitz’s Interval Partners.

Because Ameriprise Financial, Inc. (NYSE:AMP) has experienced declining sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their full holdings by the end of the third quarter. It’s worth mentioning that Louis Bacon’s Moore Global Investments sold off the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth close to $10.8 million in call options. Ken Griffin’s fund, Citadel Investment Group, also cut its call options position, about $2.5 million worth of. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ameriprise Financial, Inc. (NYSE:AMP) but similarly valued. We will take a look at FirstEnergy Corp. (NYSE:FE), NetEase, Inc (ADR) (NASDAQ:NTES), Workday Inc (NYSE:WDAY), and Credicorp Ltd. (USA) (NYSE:BAP). This group of stocks’ market values are closest to AMP’s market value.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1.54 billion. That figure was a meager $284 million in AMP’s case. NetEase, Inc (ADR) (NASDAQ:NTES) is the most popular stock in this table. On the other hand Credicorp Ltd. (USA) (NYSE:BAP) is the least popular one with only 22 bullish hedge fund positions. Ameriprise Financial, Inc. (NYSE:AMP) 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 NTES might be a better candidate to consider a long position.

Disclosure: none.