American Woodmark Corporation (AMWD): What Smart Money Thinks about This Stock?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in American Woodmark Corporation (NASDAQ:AMWD) .

The hedge fund interest towards American Woodmark Corporation (NASDAQ:AMWD) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AMWD to other stocks including Community Health Systems (NYSE:CYH), Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM), and Forward Air Corporation (NASDAQ:FWRD) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to take a glance at the recent action regarding American Woodmark Corporation (NASDAQ:AMWD).

How are hedge funds trading American Woodmark Corporation (NASDAQ:AMWD)?

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long American Woodmark Corporation, unchanged over the quarter. By comparison, 15 hedge funds held shares or bullish call options in AMWD heading into 2016. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, has the number one position in American Woodmark Corporation (NASDAQ:AMWD), worth close to $55.4 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, which holds a $25.4 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Joel Greenblatt’s Gotham Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

On the other hand, some investors opted to cut their entire stakes during the third quarter. Ken Griffin’s Citadel Investment Group cashed in the biggest investment of the 700 funds tracked by Insider Monkey, comprising close to $8 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $3.8 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to American Woodmark Corporation (NASDAQ:AMWD). We will take a look at Community Health Systems (NYSE:CYH), Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM), Forward Air Corporation (NASDAQ:FWRD), and Globalstar, Inc. (PINK:GSAT). All of these stocks’ market caps are similar to AMWD’s market cap.

As you can see these stocks had an average of 24 funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $135 million in AMWD’s case. Community Health Systems (NYSE:CYH) is the most popular stock in this table. On the other hand Forward Air Corporation (NASDAQ:FWRD) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks American Woodmark Corporation (NASDAQ:AMWD) is even less popular than Forward Air Corporation (NASDAQ:FWRD). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none