While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding APi Group Corporation (NYSE:APG).
Is APG stock a buy? Hedge funds were in a bullish mood. The number of long hedge fund bets inched up by 3 in recent months. APi Group Corporation (NYSE:APG) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that APG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 28 hedge funds in our database with APG positions at the end of the third quarter.
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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.
Andreas Halvorsen of Viking Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Now let’s take a look at the recent hedge fund action surrounding APi Group Corporation (NYSE:APG).
Do Hedge Funds Think APG Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the third quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in APG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the number one position in APi Group Corporation (NYSE:APG). Viking Global has a $605 million position in the stock, comprising 1.7% of its 13F portfolio. Sitting at the No. 2 spot is Permian Investment Partners, led by Alex Duran and Scott Hendrickson, holding a $82.5 million position; the fund has 12.3% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Michael Kahan and Jeremy Kahan’s North Peak Capital, Doug Silverman and Alexander Klabin’s Senator Investment Group and Adam Wyden’s ADW Capital. In terms of the portfolio weights assigned to each position ADW Capital allocated the biggest weight to APi Group Corporation (NYSE:APG), around 21.29% of its 13F portfolio. North Peak Capital is also relatively very bullish on the stock, setting aside 14.3 percent of its 13F equity portfolio to APG.
As industrywide interest jumped, key money managers have jumped into APi Group Corporation (NYSE:APG) headfirst. Highside Global Management, managed by Zach Petrone, assembled the largest position in APi Group Corporation (NYSE:APG). Highside Global Management had $19.7 million invested in the company at the end of the quarter. Joshua Pearl’s Hickory Lane Capital Management also made a $5.2 million investment in the stock during the quarter. The other funds with brand new APG positions are D. E. Shaw’s D E Shaw, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Noam Gottesman’s GLG Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as APi Group Corporation (NYSE:APG) but similarly valued. We will take a look at Acacia Communications, Inc. (NASDAQ:ACIA), Bank of Hawaii Corporation (NYSE:BOH), F.N.B. Corp (NYSE:FNB), Laureate Education, Inc. (NASDAQ:LAUR), Tegna Inc (NYSE:TGNA), ChampionX Corporation (NYSE:CHX), and Nektar Therapeutics (NASDAQ:NKTR). All of these stocks’ market caps resemble APG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACIA | 41 | 1102789 | 9 |
| BOH | 17 | 83558 | -4 |
| FNB | 19 | 102074 | -8 |
| LAUR | 28 | 201344 | 3 |
| TGNA | 34 | 286262 | 7 |
| CHX | 30 | 563624 | 3 |
| NKTR | 19 | 225959 | -2 |
| Average | 26.9 | 366516 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $1153 million in APG’s case. Acacia Communications, Inc. (NASDAQ:ACIA) is the most popular stock in this table. On the other hand Bank of Hawaii Corporation (NYSE:BOH) is the least popular one with only 17 bullish hedge fund positions. APi Group Corporation (NYSE:APG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APG is 67.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on APG as the stock returned 21.3% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
