Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Hedge fund interest in Amphenol Corporation (NYSE:APH) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare APH to other stocks including Hilton Worldwide Holdings Inc (NYSE:HLT), JD.Com Inc (NASDAQ:JD), and Consolidated Edison, Inc. (NYSE:ED) to get a better sense of its popularity. Our calculations also showed that APH isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most market participants, hedge funds are seen as unimportant, old financial tools of the past. While there are greater than 8000 funds with their doors open at present, Our experts look at the leaders of this group, about 750 funds. These money managers oversee the majority of all hedge funds’ total capital, and by observing their first-class investments, Insider Monkey has deciphered a few investment strategies that have historically outperformed the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the key hedge fund action surrounding Amphenol Corporation (NYSE:APH).
Hedge fund activity in Amphenol Corporation (NYSE:APH)
At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in APH over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in Amphenol Corporation (NYSE:APH), which was worth $237.5 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $56.5 million worth of shares. Moreover, Citadel Investment Group, Millennium Management, and Gotham Asset Management were also bullish on Amphenol Corporation (NYSE:APH), allocating a large percentage of their portfolios to this stock.
Due to the fact that Amphenol Corporation (NYSE:APH) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest stake of the 750 funds followed by Insider Monkey, comprising about $22.4 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $11.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Amphenol Corporation (NYSE:APH) but similarly valued. These stocks are Hilton Worldwide Holdings Inc (NYSE:HLT), JD.Com Inc (NASDAQ:JD), Consolidated Edison, Inc. (NYSE:ED), and Equity Residential (NYSE:EQR). This group of stocks’ market valuations resemble APH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLT | 44 | 4372251 | -7 |
| JD | 45 | 5156730 | -3 |
| ED | 26 | 1401907 | 3 |
| EQR | 23 | 223216 | 1 |
| Average | 34.5 | 2788526 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $2789 million. That figure was $504 million in APH’s case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Equity Residential (NYSE:EQR) is the least popular one with only 23 bullish hedge fund positions. Amphenol Corporation (NYSE:APH) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately APH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); APH investors were disappointed as the stock returned 0.8% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
