Was The Smart Money Right About Affiliated Managers Group, Inc. (AMG)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Affiliated Managers Group, Inc. (NYSE:AMG) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Hedge fund interest in Affiliated Managers Group, Inc. (NYSE:AMG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AMG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare AMG to other stocks including Duolingo Inc. (NASDAQ:DUOL), Angi Inc. (NASDAQ:ANGI), and Emcor Group Inc (NYSE:EME) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a look at the latest hedge fund action encompassing Affiliated Managers Group, Inc. (NYSE:AMG).

Sander Gerber of Hudson Bay Capital

Do Hedge Funds Think AMG Is A Good Stock To Buy Now?

At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in AMG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Southeastern Asset Management held the most valuable stake in Affiliated Managers Group, Inc. (NYSE:AMG), which was worth $241.7 million at the end of the third quarter. On the second spot was Lyrical Asset Management which amassed $143.9 million worth of shares. Ariel Investments, Arrowstreet Capital, and Hillhouse 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 Southeastern Asset Management allocated the biggest weight to Affiliated Managers Group, Inc. (NYSE:AMG), around 4.59% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, designating 2.83 percent of its 13F equity portfolio to AMG.

Due to the fact that Affiliated Managers Group, Inc. (NYSE:AMG) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds who were dropping their full holdings heading into Q4. Intriguingly, Renaissance Technologies dumped the largest stake of all the hedgies monitored by Insider Monkey, worth about $7.6 million in call options. Matthew Hulsizer’s fund, PEAK6 Capital Management, also said goodbye to its call options, about $2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Affiliated Managers Group, Inc. (NYSE:AMG). We will take a look at Duolingo Inc. (NASDAQ:DUOL), Angi Inc. (NASDAQ:ANGI), Emcor Group Inc (NYSE:EME), Acuity Brands, Inc. (NYSE:AYI), Freshpet Inc (NASDAQ:FRPT), BOK Financial Corporation (NASDAQ:BOKF), and CACI International Inc (NYSE:CACI). This group of stocks’ market caps match AMG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $310 million. That figure was $754 million in AMG’s case. Angi Inc. (NASDAQ:ANGI) is the most popular stock in this table. On the other hand Duolingo Inc. (NASDAQ:DUOL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Affiliated Managers Group, Inc. (NYSE:AMG) is more popular among hedge funds. Our overall hedge fund sentiment score for AMG is 78.7. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, AMG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AMG were disappointed as the stock returned -3.2% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.