Where Do Hedge Funds Stand On Ampco-Pittsburgh Corp. (AP)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Ampco-Pittsburgh Corp. (NYSE:AP) based on that data.

Ampco-Pittsburgh Corp. (NYSE:AP) was in 5 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. AP has experienced an increase in activity from the world’s largest hedge funds of late. There were 3 hedge funds in our database with AP positions at the end of the second quarter. Our calculations also showed that AP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Chuck Royce of Royce & Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind we’re going to take a look at the new hedge fund action surrounding Ampco-Pittsburgh Corp. (NYSE:AP).

Hedge fund activity in Ampco-Pittsburgh Corp. (NYSE:AP)

At third quarter’s end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AP over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, GAMCO Investors was the largest shareholder of Ampco-Pittsburgh Corp. (NYSE:AP), with a stake worth $7.3 million reported as of the end of September. Trailing GAMCO Investors was Renaissance Technologies, which amassed a stake valued at $2 million. GAMCO Investors, Invenomic Capital Management, and Royce & Associates 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 Invenomic Capital Management allocated the biggest weight to Ampco-Pittsburgh Corp. (NYSE:AP), around 0.17% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to AP.

As one would reasonably expect, some big names were breaking ground themselves. GAMCO Investors, managed by Mario Gabelli, established the most valuable position in Ampco-Pittsburgh Corp. (NYSE:AP). GAMCO Investors had $0.8 million invested in the company at the end of the quarter. Ali Motamed’s Invenomic Capital Management also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new AP investors: Ali Motamed’s Invenomic Capital Management and Andrew Hahn’s Ursa Fund Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ampco-Pittsburgh Corp. (NYSE:AP) but similarly valued. These stocks are Manhattan Bridge Capital, Inc (NASDAQ:LOAN), OpGen, Inc. (NASDAQ:OPGN), Ocugen, Inc. (NASDAQ:OCGN), Gridsum Holding Inc. (NASDAQ:GSUM), Sensus Healthcare, Inc. (NASDAQ:SRTS), Mogo Inc. (NASDAQ:MOGO), and Houston Wire & Cable Company (NASDAQ:HWCC). This group of stocks’ market values are similar to AP’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $11 million in AP’s case. Houston Wire & Cable Company (NASDAQ:HWCC) is the most popular stock in this table. On the other hand Manhattan Bridge Capital, Inc (NASDAQ:LOAN) is the least popular one with only 1 bullish hedge fund positions. Ampco-Pittsburgh Corp. (NYSE:AP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AP is 57. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on AP as the stock returned 31% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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