Do Hedge Funds Love Astec Industries, Inc. (ASTE)?

In this article we will analyze whether Astec Industries, Inc. (NASDAQ:ASTE) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Astec Industries, Inc. (NASDAQ:ASTE) has seen a decrease in support from the world’s most elite money managers of late. Astec Industries, Inc. (NASDAQ:ASTE) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 19. There were 12 hedge funds in our database with ASTE holdings at the end of March. Our calculations also showed that ASTE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 best EV 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. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Astec Industries, Inc. (NASDAQ:ASTE).

Do Hedge Funds Think ASTE Is A Good Stock To Buy Now?

At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ASTE over the last 24 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the number one position in Astec Industries, Inc. (NASDAQ:ASTE). GAMCO Investors has a $60.7 million position in the stock, comprising 0.5% of its 13F portfolio. On GAMCO Investors’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $2.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Cliff Asness’s AQR Capital Management, Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Astec Industries, Inc. (NASDAQ:ASTE), around 0.51% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.26 percent of its 13F equity portfolio to ASTE.

Due to the fact that Astec Industries, Inc. (NASDAQ:ASTE) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that slashed their entire stakes in the second quarter. Interestingly, Robert Bishop’s Impala Asset Management cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $14.8 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $10.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds in the second quarter.

Let’s check out hedge fund activity in other stocks similar to Astec Industries, Inc. (NASDAQ:ASTE). These stocks are Uxin Limited (NASDAQ:UXIN), The Greenbrier Companies Inc (NYSE:GBX), Middlesex Water Company (NASDAQ:MSEX), BioAtla, Inc. (NASDAQ:BCAB), Genesis Energy, L.P. (NYSE:GEL), Sculptor Capital Management, Inc. (NYSE:SCU), and Cytokinetics, Inc. (NASDAQ:CYTK). This group of stocks’ market valuations are similar to ASTE’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $68 million in ASTE’s case. Cytokinetics, Inc. (NASDAQ:CYTK) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 5 bullish hedge fund positions. Astec Industries, Inc. (NASDAQ:ASTE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ASTE is 28.4. 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately ASTE wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ASTE investors were disappointed as the stock returned -11.3% since the end of June (through 9/27) 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.