We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Atkore International Group Inc. (NYSE:ATKR).
Atkore International Group Inc. (NYSE:ATKR) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. ATKR was in 23 hedge funds’ portfolios at the end of December. There were 21 hedge funds in our database with ATKR positions at the end of the previous quarter. Our calculations also showed that ATKR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Steven Cohen of Point72 Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the recent hedge fund action surrounding Atkore International Group Inc. (NYSE:ATKR).
How have hedgies been trading Atkore International Group Inc. (NYSE:ATKR)?
Heading into the first quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the third quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in ATKR a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Atkore International Group Inc. (NYSE:ATKR), which was worth $32.1 million at the end of the third quarter. On the second spot was GLG Partners which amassed $25.6 million worth of shares. Millennium Management, AQR Capital Management, and Marshall Wace LLP 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 Corsair Capital Management allocated the biggest weight to Atkore International Group Inc. (NYSE:ATKR), around 0.8% of its 13F portfolio. Qtron Investments is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to ATKR.
Consequently, some big names have jumped into Atkore International Group Inc. (NYSE:ATKR) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, established the biggest position in Atkore International Group Inc. (NYSE:ATKR). Tudor Investment Corp had $1.5 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.8 million investment in the stock during the quarter. The other funds with brand new ATKR positions are Schonfeld Strategic Advisors, Steve Cohen’s Point72 Asset Management, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks similar to Atkore International Group Inc. (NYSE:ATKR). We will take a look at Taubman Centers, Inc. (NYSE:TCO), Hostess Brands, Inc. (NASDAQ:TWNK), Intra-Cellular Therapies Inc (NASDAQ:ITCI), and Mueller Water Products, Inc. (NYSE:MWA). This group of stocks’ market values are closest to ATKR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCO | 26 | 128381 | 2 |
| TWNK | 37 | 288944 | 4 |
| ITCI | 12 | 135601 | 1 |
| MWA | 20 | 276558 | -3 |
| Average | 23.75 | 207371 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $184 million in ATKR’s case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Intra-Cellular Therapies Inc (NASDAQ:ITCI) is the least popular one with only 12 bullish hedge fund positions. Atkore International Group Inc. (NYSE:ATKR) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately ATKR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ATKR investors were disappointed as the stock returned -47.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
