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, 2020 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 Apollo Global Management Inc (NYSE:APO).
Is APO a good stock to buy? Apollo Global Management Inc (NYSE:APO) was in 37 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. APO investors should pay attention to a decrease in support from the world’s most elite money managers lately. There were 44 hedge funds in our database with APO positions at the end of the first quarter. Our calculations also showed that APO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
David Brown of Hawk Ridge Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to go over the latest hedge fund action regarding Apollo Global Management Inc (NYSE:APO).
Do Hedge Funds Think APO Is A Good Stock To Buy Now?
At Q2’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in APO over the last 24 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chase Coleman’s Tiger Global Management LLC has the number one position in Apollo Global Management Inc (NYSE:APO), worth close to $1.9315 billion, comprising 3.6% of its total 13F portfolio. The second largest stake is held by Hawk Ridge Management, led by David Brown, holding a $112.7 million position; 8.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain Israel Englander’s Millennium Management, Richard Merage’s MIG Capital and Jeff Lignelli’s Incline Global Management. In terms of the portfolio weights assigned to each position Hawk Ridge Management allocated the biggest weight to Apollo Global Management Inc (NYSE:APO), around 8.09% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, designating 6.63 percent of its 13F equity portfolio to APO.
Because Apollo Global Management Inc (NYSE:APO) has faced declining sentiment from the aggregate hedge fund industry, we can see that there were a few hedgies that slashed their entire stakes in the second quarter. Interestingly, David Rosen’s Rubric Capital Management dumped the largest position of the 750 funds followed by Insider Monkey, totaling close to $53.6 million in stock, and Tom Gayner’s Markel Gayner Asset Management was right behind this move, as the fund dumped about $47.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 7 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Apollo Global Management Inc (NYSE:APO). These stocks are Shaw Communications Inc (NYSE:SJR), News Corp (NASDAQ:NWS), Loews Corporation (NYSE:L), Solaredge Technologies Inc (NASDAQ:SEDG), PulteGroup, Inc. (NYSE:PHM), Telefonica Brasil SA (NYSE:VIV), and Ceridian HCM Holding Inc. (NYSE:CDAY). All of these stocks’ market caps are closest to APO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SJR | 23 | 697694 | 2 |
| NWS | 19 | 178722 | -2 |
| L | 28 | 212289 | 7 |
| SEDG | 37 | 675586 | 5 |
| PHM | 34 | 948574 | -8 |
| VIV | 9 | 59331 | 0 |
| CDAY | 25 | 1476874 | -3 |
| Average | 25 | 607010 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $607 million. That figure was $2618 million in APO’s case. Solaredge Technologies Inc (NASDAQ:SEDG) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 9 bullish hedge fund positions. Apollo Global Management Inc (NYSE:APO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APO is 73.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on APO as the stock returned 6.1% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow American Community Properties Trust (NYSE:APO)
Follow American Community Properties Trust (NYSE:APO)
Suggested Articles:
Disclosure: None. This article was originally published at Insider Monkey.
