As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Agrify Corporation (NASDAQ:AGFY).
Is AGFY a good stock to buy? Investors who are in the know were betting on the stock. The number of long hedge fund bets went up by 5 lately. Agrify Corporation (NASDAQ:AGFY) was in 5 hedge funds' portfolios at the end of March. Our calculations also showed that AGFY isn't among the 30 most popular stocks among hedge funds (click for Q1 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Richard Driehaus of Driehaus Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 let's take a peek at the fresh hedge fund action regarding Agrify Corporation (NASDAQ:AGFY).
Do Hedge Funds Think AGFY Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5 from the fourth quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in AGFY 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.
The largest stake in Agrify Corporation (NASDAQ:AGFY) was held by Driehaus Capital, which reported holding $13.7 million worth of stock at the end of December. It was followed by Pentwater Capital Management with a $3 million position. Other investors bullish on the company included Royce & Associates, Granite Point Capital, and Sabby Capital. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to Agrify Corporation (NASDAQ:AGFY), around 0.2% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to AGFY.
Now, key money managers were leading the bulls' herd. Driehaus Capital, managed by Richard Driehaus, assembled the most outsized position in Agrify Corporation (NASDAQ:AGFY). Driehaus Capital had $13.7 million invested in the company at the end of the quarter. Matthew Halbower's Pentwater Capital Management also made a $3 million investment in the stock during the quarter. The other funds with new positions in the stock are Chuck Royce's Royce & Associates, Warren Lammert's Granite Point Capital, and Hal Mintz's Sabby Capital.
Let's now take a look at hedge fund activity in other stocks similar to Agrify Corporation (NASDAQ:AGFY). These stocks are First Bank (NASDAQ:FRBA), Castlight Health Inc (NYSE:CSLT), Novan, Inc. (NASDAQ:NOVN), Sharps Compliance Corp. (NASDAQ:SMED), Parke Bancorp, Inc. (NASDAQ:PKBK), Eneti Inc. (NYSE:NETI), and ZK International Group Co., Ltd. (NASDAQ:ZKIN). All of these stocks' market caps match AGFY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRBA,5,8453,-2 CSLT,24,40849,12 NOVN,4,5028,3 SMED,9,19326,3 PKBK,3,10303,0 NETI,2,4073,0 ZKIN,3,1032,2 Average,7.1,12723,2.6 [/table]
As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $19 million in AGFY's case. Castlight Health Inc (NYSE:CSLT) is the most popular stock in this table. On the other hand Eneti Inc. (NYSE:NETI) is the least popular one with only 2 bullish hedge fund positions. Agrify Corporation (NASDAQ:AGFY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AGFY is 20.9. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately AGFY wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AGFY investors were disappointed as the stock returned -20.7% since the end of March (through 6/18) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
