Hedge Funds Are Coming Back To AECOM (ACM)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards AECOM (NYSE:ACM) to find out whether there were any major changes in hedge funds’ views.

Is AECOM (NYSE:ACM) a buy, sell, or hold? The smart money was becoming more confident. The number of bullish hedge fund bets inched up by 7 recently. AECOM (NYSE:ACM) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ACM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 32 hedge funds in our database with ACM holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to go over the key hedge fund action surrounding AECOM (NYSE:ACM).

Jeffrey Smith of Starboard Value LP

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

Heading into the fourth quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ACM over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the biggest position in AECOM (NYSE:ACM), worth close to $463 million, accounting for 8.5% of its total 13F portfolio. The second largest stake is held by TOMS Capital, managed by Benjamin Pass, which holds a $127 million call position; the fund has 7.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Benjamin Pass’s TOMS Capital, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to AECOM (NYSE:ACM), around 8.47% of its 13F portfolio. TOMS Capital is also relatively very bullish on the stock, designating 7.3 percent of its 13F equity portfolio to ACM.

As industrywide interest jumped, some big names have jumped into AECOM (NYSE:ACM) headfirst. TOMS Capital, managed by Benjamin Pass, established the most outsized call position in AECOM (NYSE:ACM). TOMS Capital had $127 million invested in the company at the end of the quarter. Benjamin Pass’s TOMS Capital also initiated a $67.1 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Steve Cohen’s Point72 Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AECOM (NYSE:ACM) but similarly valued. We will take a look at Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), Algonquin Power & Utilities Corp. (NYSE:AQN), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Sunrun Inc (NASDAQ:RUN), Ascendis Pharma A/S (NASDAQ:ASND), Globe Life Inc. (NYSE:GL), and Syneos Health, Inc. (NASDAQ:SYNH). All of these stocks’ market caps are similar to ACM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $1136 million. That figure was $784 million in ACM’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks AECOM (NYSE:ACM) is more popular among hedge funds. Our overall hedge fund sentiment score for ACM is 90. 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. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on ACM as the stock returned 9.2% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.