Hedge Funds Are Piling Into ABM Industries, Inc. (ABM)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about ABM Industries, Inc. (NYSE:ABM) in this article.

ABM Industries, Inc. (NYSE:ABM) was in 23 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ABM shareholders have witnessed an increase in hedge fund interest of late. There were 17 hedge funds in our database with ABM positions at the end of the first quarter. Our calculations also showed that ABM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In today’s marketplace there are many gauges stock market investors put to use to appraise their stock investments. Two of the less known gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can outperform their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. Now we’re going to take a look at the recent hedge fund action surrounding ABM Industries, Inc. (NYSE:ABM).

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

At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from the first quarter of 2020. On the other hand, there were a total of 21 hedge funds with a bullish position in ABM a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in ABM Industries, Inc. (NYSE:ABM), which was worth $27.1 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $15.2 million worth of shares. Citadel Investment Group, Leonard Green & Partners, and D E Shaw 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 Quantinno Capital allocated the biggest weight to ABM Industries, Inc. (NYSE:ABM), around 0.51% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.12 percent of its 13F equity portfolio to ABM.

Now, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the biggest position in ABM Industries, Inc. (NYSE:ABM). Millennium Management had $27.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $2.3 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Paul Tudor Jones’s Tudor Investment Corp, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ABM Industries, Inc. (NYSE:ABM) but similarly valued. These stocks are Yelp Inc (NYSE:YELP), Renewable Energy Group Inc (NASDAQ:REGI), Avista Corp (NYSE:AVA), Greif, Inc. (NYSE:GEF), Patterson Companies, Inc. (NASDAQ:PDCO), PJT Partners Inc (NYSE:PJT), and Desktop Metal, Inc. (NYSE:DM). All of these stocks’ market caps match ABM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $76 million in ABM’s case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Greif, Inc. (NYSE:GEF) is the least popular one with only 13 bullish hedge fund positions. ABM Industries, Inc. (NYSE:ABM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABM is 75.7. 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 positive signal but 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately ABM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ABM were disappointed as the stock returned 0.8% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

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