In the eyes of most traders, hedge funds are perceived as slow, old investment tools of years past. While there are over 8000 funds in operation today, we hone in on the bigwigs of this group, around 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total capital, and by paying attention to their highest performing investments, we have unearthed a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as beneficial, optimistic insider trading activity is another way to parse down the world of equities. There are many reasons for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this strategy if investors know what to do (learn more here).
Now, it’s important to take a look at the recent action surrounding Acuity Brands, Inc. (NYSE:AYI).
What have hedge funds been doing with Acuity Brands, Inc. (NYSE:AYI)?
In preparation for this quarter, a total of 17 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly.
Of the funds we track, Columbus Circle Investors, managed by Donald Chiboucis, holds the biggest position in Acuity Brands, Inc. (NYSE:AYI). Columbus Circle Investors has a $44.7 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Paul Reeder and Edward Shapiro of PAR Capital Management, with a $24.4 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Chuck Royce’s Royce & Associates and Andrew Sandler’s Sandler Capital Management.
Because Acuity Brands, Inc. (NYSE:AYI) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of hedgies that elected to cut their full holdings heading into Q2. At the top of the heap, Jim Simons’s Renaissance Technologies cut the largest investment of all the hedgies we monitor, comprising close to $16.8 million in stock.. John A. Levin’s fund, Levin Capital Strategies, also dropped its stock, about $3.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Acuity Brands, Inc. (NYSE:AYI)?
Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past half-year. Over the latest six-month time period, Acuity Brands, Inc. (NYSE:AYI) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Acuity Brands, Inc. (NYSE:AYI). These stocks are LG Display Co Ltd. (ADR) (NYSE:LPL), Sanmina Corp (NASDAQ:SANM), Molex Incorporated (NASDAQ:MOLX), AVX Corporation (NYSE:AVX), and Dolby Laboratories, Inc. (NYSE:DLB). This group of stocks are in the diversified electronics industry and their market caps match AYI’s market cap.
