Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Amplify Energy Corp. (NYSE:AMPY) based on that data and determine whether they were really smart about the stock.
Is Amplify Energy Corp. (NYSE:AMPY) the right pick for your portfolio? Hedge funds were becoming hopeful. The number of bullish hedge fund bets increased by 1 lately. Amplify Energy Corp. (NYSE:AMPY) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 22. Our calculations also showed that AMPY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 17 hedge funds in our database with AMPY holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Marc Lasry of Avenue Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s view the new hedge fund action encompassing Amplify Energy Corp. (NYSE:AMPY).
What have hedge funds been doing with Amplify Energy Corp. (NYSE:AMPY)?
At second quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in AMPY a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Fir Tree was the largest shareholder of Amplify Energy Corp. (NYSE:AMPY), with a stake worth $12.8 million reported as of the end of September. Trailing Fir Tree was Brigade Capital, which amassed a stake valued at $4.1 million. Avenue Capital, Oaktree Capital Management, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Avenue Capital allocated the biggest weight to Amplify Energy Corp. (NYSE:AMPY), around 2.07% of its 13F portfolio. Fir Tree is also relatively very bullish on the stock, designating 0.96 percent of its 13F equity portfolio to AMPY.
Now, key hedge funds have been driving this bullishness. Paloma Partners, managed by Donald Sussman, assembled the largest position in Amplify Energy Corp. (NYSE:AMPY). Paloma Partners had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Amplify Energy Corp. (NYSE:AMPY) but similarly valued. We will take a look at SandRidge Energy Inc. (NYSE:SD), Fujian Blue Hat Interactive Entertainment Technology Ltd. (NASDAQ:BHAT), Tailored Brands, Inc. (NYSE:TLRD), O2Micro International Limited (NASDAQ:OIIM), RF Industries, Ltd. (NASDAQ:RFIL), Seelos Therapeutics, Inc. (NASDAQ:SEEL), and Pathfinder Bancorp, Inc. (NASDAQ:PBHC). This group of stocks’ market valuations match AMPY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SD | 13 | 14556 | 1 |
| BHAT | 1 | 288 | 0 |
| TLRD | 13 | 4821 | 7 |
| OIIM | 2 | 3633 | 0 |
| RFIL | 3 | 4191 | 1 |
| SEEL | 2 | 1070 | -2 |
| PBHC | 1 | 2565 | 0 |
| Average | 5 | 4446 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $22 million in AMPY’s case. SandRidge Energy Inc. (NYSE:SD) is the most popular stock in this table. On the other hand Fujian Blue Hat Interactive Entertainment Technology Ltd.(NASDAQ:BHAT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Amplify Energy Corp. (NYSE:AMPY) is more popular among hedge funds. Our overall hedge fund sentiment score for AMPY is 80.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately AMPY wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AMPY were disappointed as the stock returned -30.9% 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
