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 Apollo Commercial Real Est. Finance Inc (NYSE:ARI) and see how the stock is affected by the recent hedge fund activity.
Apollo Commercial Real Est. Finance Inc (NYSE:ARI) has experienced a decrease in hedge fund sentiment lately. ARI was in 9 hedge funds’ portfolios at the end of the third quarter of 2015. There were 11 hedge funds in our database with ARI holdings 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 Smith & Wesson Holding Corporation (NASDAQ:SWHC), Infinity Property and Casualty Corp. (NASDAQ:IPCC), and Canadian Solar Inc. (NASDAQ:CSIQ) to gather more data points.
Follow Apollo Commercial Real Estate Finance Inc. (NYSE:ARI)
Follow Apollo Commercial Real Estate Finance Inc. (NYSE:ARI)
In the 21st century investor’s toolkit there are several indicators shareholders can use to assess publicly traded companies. A couple of the most innovative indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best fund managers can trounce the S&P 500 by a solid margin (see the details here).
With all of this in mind, we’re going to analyze the fresh action regarding Apollo Commercial Real Est. Finance Inc (NYSE:ARI).
Hedge fund activity in Apollo Commercial Real Est. Finance Inc (NYSE:ARI)
Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in Apollo Commercial Real Est. Finance Inc (NYSE:ARI). Renaissance Technologies has a $16.3 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second largest stake is held by Cloud Gate Capital, managed by Brian Newman and David Heller, which holds an $7 million position; 3.5% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass Arthur Wrubel’s Wesley Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Steve Pei’s Gratia Capital.
Seeing as Apollo Commercial Real Est. Finance Inc (NYSE:ARI) has experienced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few money managers that slashed their entire stakes last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest position of the 700 funds monitored by Insider Monkey, comprising close to $1.5 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Apollo Commercial Real Est. Finance Inc (NYSE:ARI). These stocks are Smith & Wesson Holding Corporation (NASDAQ:SWHC), Infinity Property and Casualty Corp. (NASDAQ:IPCC), Canadian Solar Inc. (NASDAQ:CSIQ), and Repligen Corporation (NASDAQ:RGEN). This group of stocks’ market caps are similar to ARI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWHC | 30 | 149899 | 8 |
| IPCC | 8 | 70045 | 0 |
| CSIQ | 22 | 106081 | -10 |
| RGEN | 14 | 65400 | 0 |
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $40 million in ARI’s case. Smith & Wesson Holding Corporation (NASDAQ:SWHC) is the most popular stock in this table. On the other hand Infinity Property and Casualty Corp. (NASDAQ:IPCC) is the least popular one with only 8 bullish hedge fund positions. Apollo Commercial Real Est. Finance Inc (NYSE:ARI) 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. In this regard SWHC might be a better candidate to consider a long position.
