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

Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Ameriprise Financial, Inc. (NYSE:AMP) and see how the stock is affected by the recent hedge fund activity.

Ameriprise Financial, Inc. (NYSE:AMP) investors should be aware of a decrease in enthusiasm from smart money recently. AMP was in 39 hedge funds’ portfolios at the end of September. There were 44 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 Cummins Inc. (NYSE:CMI), CBS Corporation (NYSE:CBS), and Williams Partners L.P. (NYSE:WPZ) to gather more data points.

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Keeping this in mind, let’s take a gander at the recent action regarding Ameriprise Financial, Inc. (NYSE:AMP).

How have hedgies been trading Ameriprise Financial, Inc. (NYSE:AMP)?

Heading into Q4, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one position in Ameriprise Financial, Inc. (NYSE:AMP), worth close to $245.3 million, corresponding to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Viking Global, managed by Andreas Halvorsen, which holds a $174.2 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Anand Parekh’s Alyeska Investment Group and Cliff Asness’s AQR Capital Management.

Judging by the fact that Ameriprise Financial, Inc. (NYSE:AMP) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few fund managers that slashed their entire stakes heading into Q4. It’s worth mentioning that Ken Heebner’s Capital Growth Management dropped the largest position of the 700 funds monitored by Insider Monkey, comprising an estimated $18.7 million in call options., and Wojciech Uzdelewicz’s Espalier Global Management was right behind this move, as the fund said goodbye to about $10.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Ameriprise Financial, Inc. (NYSE:AMP). We will take a look at Cummins Inc. (NYSE:CMI), CBS Corporation (NYSE:CBS), Williams Partners L.P. (NYSE:WPZ), and Zimmer Biomet Holdings Inc (NYSE:ZBH). This group of stocks’ market values are similar to AMP’s market value.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1183 million. That figure was $1074 million in AMP’s case. CBS Corporation (NYSE:CBS) is the most popular stock in this table. On the other hand Williams Partners L.P. (NYSE:WPZ) is the least popular one with only 19 bullish hedge fund positions. Although Ameriprise Financial, Inc. (NYSE:AMP) is not the least popular stock in this group, it has not attracted much attention from investors. This may indicate it is not a good buying opportunity; therefore, we’d rather spend our time researching stocks that hedge funds are collectively most bullish on. In this regard, CBS might be a better alternative.