Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Anterix Inc. (NASDAQ:ATEX) was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. ATEX has seen an increase in activity from the world’s largest hedge funds of late. There were 9 hedge funds in our database with ATEX positions at the end of the previous quarter. Our calculations also showed that ATEX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
Jeffrey Altman of Owl Creek Asset Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a look at the key hedge fund action encompassing Anterix Inc. (NASDAQ:ATEX).
How have hedgies been trading Anterix Inc. (NASDAQ:ATEX)?
Heading into the fourth quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATEX over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Anterix Inc. (NASDAQ:ATEX) was held by Owl Creek Asset Management, which reported holding $164.8 million worth of stock at the end of September. It was followed by Cerberus Capital Management with a $65.8 million position. Other investors bullish on the company included Lomas Capital Management, QVT Financial, and Hawk Ridge Management. In terms of the portfolio weights assigned to each position Cerberus Capital Management allocated the biggest weight to Anterix Inc. (NASDAQ:ATEX), around 8.59% of its 13F portfolio. Owl Creek Asset Management is also relatively very bullish on the stock, earmarking 8.51 percent of its 13F equity portfolio to ATEX.
Now, key money managers have jumped into Anterix Inc. (NASDAQ:ATEX) headfirst. Owl Creek Asset Management, managed by Jeffrey Altman, assembled the biggest position in Anterix Inc. (NASDAQ:ATEX). Owl Creek Asset Management had $164.8 million invested in the company at the end of the quarter. Daniel Lascano’s Lomas Capital Management also initiated a $51.1 million position during the quarter. The other funds with new positions in the stock are Daniel Gold’s QVT Financial, David Brown’s Hawk Ridge Management, and David E. Shaw’s D E Shaw.
Let’s go over hedge fund activity in other stocks similar to Anterix Inc. (NASDAQ:ATEX). These stocks are Echo Global Logistics, Inc. (NASDAQ:ECHO), Tristate Capital Holdings Inc (NASDAQ:TSC), SurModics, Inc. (NASDAQ:SRDX), and AquaVenture Holdings Limited (NYSE:WAAS). All of these stocks’ market caps resemble ATEX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECHO | 20 | 32815 | 8 |
| TSC | 9 | 42321 | -1 |
| SRDX | 13 | 138577 | -1 |
| WAAS | 12 | 25073 | 3 |
| Average | 13.5 | 59697 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $318 million in ATEX’s case. Echo Global Logistics, Inc. (NASDAQ:ECHO) is the most popular stock in this table. On the other hand Tristate Capital Holdings Inc (NASDAQ:TSC) is the least popular one with only 9 bullish hedge fund positions. Anterix Inc. (NASDAQ:ATEX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ATEX as the stock returned 17.3% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
