We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Atkore Inc. (NYSE:ATKR).
Is Atkore Inc. (NYSE:ATKR) an outstanding investment now? The smart money was betting on the stock. The number of long hedge fund positions improved by 4 recently. Atkore Inc. (NYSE:ATKR) was in 25 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ATKR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with ATKR positions at the end of the first quarter.
To most traders, hedge funds are perceived as underperforming, old financial tools of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers hone in on the crème de la crème of this club, about 850 funds. These investment experts orchestrate the majority of the smart money’s total asset base, and by keeping track of their matchless picks, Insider Monkey has unsheathed numerous investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. 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.
Matthew Hulsizer of PEAK6 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. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Atkore Inc. (NYSE:ATKR).
Do Hedge Funds Think ATKR Is A Good Stock To Buy Now?
At second quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the first quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in ATKR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Atkore Inc. (NYSE:ATKR) was held by Arrowstreet Capital, which reported holding $48.1 million worth of stock at the end of June. It was followed by Cardinal Capital with a $44.9 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Venator Capital Management allocated the biggest weight to Atkore Inc. (NYSE:ATKR), around 1.21% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, earmarking 1.07 percent of its 13F equity portfolio to ATKR.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), created the biggest position in Atkore Inc. (NYSE:ATKR). Schonfeld Strategic Advisors had $0.6 million invested in the company at the end of the quarter. Qing Li’s Sciencast Management also made a $0.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Atkore Inc. (NYSE:ATKR) but similarly valued. We will take a look at Medifast, Inc. (NYSE:MED), Dorman Products Inc. (NASDAQ:DORM), Terex Corporation (NYSE:TEX), SAGE Therapeutics Inc (NASDAQ:SAGE), J&J Snack Foods Corp. (NASDAQ:JJSF), LCI Industries (NYSE:LCII), and Walker & Dunlop Inc. (NYSE:WD). All of these stocks’ market caps are closest to ATKR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MED | 23 | 376934 | 1 |
| DORM | 18 | 67951 | -3 |
| TEX | 27 | 470987 | -4 |
| SAGE | 27 | 258449 | 0 |
| JJSF | 15 | 70134 | 0 |
| LCII | 15 | 109332 | -3 |
| WD | 11 | 78419 | -8 |
| Average | 19.4 | 204601 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $205 million. That figure was $180 million in ATKR’s case. Terex Corporation (NYSE:TEX) is the most popular stock in this table. On the other hand Walker & Dunlop Inc. (NYSE:WD) is the least popular one with only 11 bullish hedge fund positions. Atkore Inc. (NYSE:ATKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATKR is 82.8. 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 gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ATKR as the stock returned 27% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Atkore Inc. (NYSE:ATKR)
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Disclosure: None. This article was originally published at Insider Monkey.
