In this article you are going to find out whether hedge funds think AllianceBernstein Holding LP (NYSE:AB) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
AllianceBernstein Holding LP (NYSE:AB) has experienced a decrease in support from the world's most elite money managers recently. AB was in 7 hedge funds' portfolios at the end of the first quarter of 2020. There were 11 hedge funds in our database with AB holdings at the end of the previous quarter. Our calculations also showed that AB isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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. 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 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the new hedge fund action regarding AllianceBernstein Holding LP (NYSE:AB).
How have hedgies been trading AllianceBernstein Holding LP (NYSE:AB)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -36% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in AB 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.
More specifically, Royce & Associates was the largest shareholder of AllianceBernstein Holding LP (NYSE:AB), with a stake worth $7.3 million reported as of the end of September. Trailing Royce & Associates was Arrowstreet Capital, which amassed a stake valued at $5.5 million. Schonfeld Strategic Advisors, GAMCO Investors, and Citadel Investment Group 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 Dorset Management allocated the biggest weight to AllianceBernstein Holding LP (NYSE:AB), around 0.59% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, dishing out 0.21 percent of its 13F equity portfolio to AB.
Judging by the fact that AllianceBernstein Holding LP (NYSE:AB) has witnessed a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of fund managers who sold off their full holdings last quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the biggest investment of the 750 funds followed by Insider Monkey, valued at about $5.3 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund cut about $0.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as AllianceBernstein Holding LP (NYSE:AB) but similarly valued. These stocks are Fastly, Inc. (NYSE:FSLY), Companhia Siderurgica Nacional (NYSE:SID), Univar Solutions Inc (NYSE:UNVR), and EQT Corporation (NYSE:EQT). This group of stocks' market valuations resemble AB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSLY,22,276560,3 SID,5,3203,-1 UNVR,32,686782,-11 EQT,30,234166,1 Average,22.25,300178,-2 [/table]
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $300 million. That figure was $20 million in AB's case. Univar Solutions Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 5 bullish hedge fund positions. AllianceBernstein Holding LP (NYSE:AB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on AB as the stock returned 45.3% during the second quarter and outperformed the market by an even larger margin.
