Here is What Hedge Funds Think About Armstrong World Industries, Inc. (AWI)

Is Armstrong World Industries, Inc. (NYSE:AWI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Armstrong World Industries, Inc. (NYSE:AWI) an excellent investment right now? Investors who are in the know were betting on the stock. The number of bullish hedge fund positions inched up by 5 lately. Armstrong World Industries, Inc. (NYSE:AWI) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. Our calculations also showed that AWI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Now let’s take a peek at the fresh hedge fund action surrounding Armstrong World Industries, Inc. (NYSE:AWI).

Jeffrey Gates of Gates Capital

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

At the end of September, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in AWI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, William von Mueffling’s Cantillon Capital Management has the number one position in Armstrong World Industries, Inc. (NYSE:AWI), worth close to $112.5 million, comprising 0.8% of its total 13F portfolio. The second largest stake is held by Yacktman Asset Management, managed by Donald Yacktman, which holds a $104.4 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Jeffrey Gates’s Gates Capital Management, Richard Merage’s MIG Capital and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Owls Nest Partners allocated the biggest weight to Armstrong World Industries, Inc. (NYSE:AWI), around 8.16% of its 13F portfolio. MIG Capital is also relatively very bullish on the stock, setting aside 4.34 percent of its 13F equity portfolio to AWI.

Consequently, specific money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most valuable position in Armstrong World Industries, Inc. (NYSE:AWI). Adage Capital Management had $24.2 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $9.1 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Mika Toikka’s AlphaCrest Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Armstrong World Industries, Inc. (NYSE:AWI) but similarly valued. We will take a look at Selective Insurance Group, Inc. (NASDAQ:SIGI), RLI Corp. (NYSE:RLI), Park Hotels & Resorts Inc. (NYSE:PK), Q2 Holdings Inc (NYSE:QTWO), Flowserve Corporation (NYSE:FLS), Evoqua Water Technologies Corp. (NYSE:AQUA), and Hamilton Lane Incorporated (NASDAQ:HLNE). This group of stocks’ market caps are closest to AWI’s market cap.

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As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $480 million in AWI’s case. Evoqua Water Technologies Corp. (NYSE:AQUA) is the most popular stock in this table. On the other hand Selective Insurance Group, Inc. (NASDAQ:SIGI) is the least popular one with only 14 bullish hedge fund positions. Armstrong World Industries, Inc. (NYSE:AWI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AWI is 64.2. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on AWI as the stock returned 21.9% since the end of Q3 (through 12/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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