Here is What Hedge Funds Think About Altra Industrial Motion Corp (AIMC)

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Altra Industrial Motion Corp (NASDAQ:AIMC) .

Is Altra Industrial Motion Corp (NASDAQ:AIMC) undervalued? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund bets that are revealed through the 13F filings inched up by 5 lately. AIMCwas in 18 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with AIMC positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Keryx Biopharmaceuticals (NASDAQ:KERX), Penn West Petroleum Ltd (USA) (NYSE:PWE), and Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about Altra Industrial Motion Corp (NASDAQ:AIMC)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 38% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in AIMC heading into this year. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Spitfire Capital, led by Julian Allen, holds the biggest position in Altra Industrial Motion Corp (NASDAQ:AIMC). Spitfire Capital has a $10.1 million position in the stock, comprising 4.5% of its 13F portfolio. Coming in second is Jim Simons’ Renaissance Technologies, with a $6.2 million position. Some other hedge funds and institutional investors that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Hondros’ AlphaOne Capital Partners and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key money managers have been driving this bullishness. Hutchin Hill Capital, led by Neil Chriss, assembled the most valuable position in Altra Industrial Motion Corp (NASDAQ:AIMC). Hutchin Hill Capital had $0.6 million invested in the company at the end of the quarter. Paul Tudor Jones’ Tudor Investment Corp also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Robert B. Gillam’s McKinley Capital Management.

Let’s now review hedge fund activity in other stocks similar to Altra Industrial Motion Corp (NASDAQ:AIMC). These stocks are Keryx Biopharmaceuticals (NASDAQ:KERX), Penn West Petroleum Ltd (USA) (NYSE:PWE), Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI), and Amicus Therapeutics, Inc. (NASDAQ:FOLD). All of these stocks’ market caps are similar to AIMC’s market cap.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $32 million in AIMC’s case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI) is the least popular one with only 5 bullish hedge fund positions. Altra Industrial Motion Corp (NASDAQ:AIMC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FOLD might be a better candidate to consider taking a long position in.

Disclosure: None