Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Acushnet Holdings Corp. (NYSE:GOLF).
Is Acushnet Holdings Corp. (NYSE:GOLF) the right investment to pursue these days? The smart money is taking a pessimistic view. The number of bullish hedge fund positions decreased by 2 lately. Our calculations also showed that GOLF isn’t among the 30 most popular stocks among hedge funds (view the video below). GOLF was in 11 hedge funds’ portfolios at the end of June. There were 13 hedge funds in our database with GOLF holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of metrics market participants put to use to analyze stocks. A duo of the most underrated metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top fund managers can outclass the broader indices by a solid margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the latest hedge fund action encompassing Acushnet Holdings Corp. (NYSE:GOLF).
What have hedge funds been doing with Acushnet Holdings Corp. (NYSE:GOLF)?
At Q2’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in GOLF a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Sensato Capital Management was the largest shareholder of Acushnet Holdings Corp. (NYSE:GOLF), with a stake worth $9.5 million reported as of the end of March. Trailing Sensato Capital Management was Millennium Management, which amassed a stake valued at $6.1 million. AQR Capital Management, Marshall Wace LLP, and Winton Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Acushnet Holdings Corp. (NYSE:GOLF) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedge funds who sold off their entire stakes by the end of the second quarter. At the top of the heap, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital cut the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $0.6 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the second quarter.
Let’s check out hedge fund activity in other stocks similar to Acushnet Holdings Corp. (NYSE:GOLF). We will take a look at TowneBank (NASDAQ:TOWN), Greif, Inc. (NYSE:GEF), International Speedway Corporation (NASDAQ:ISCA), and LexinFintech Holdings Ltd. (NASDAQ:LX). This group of stocks’ market valuations match GOLF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOWN | 7 | 36621 | 0 |
| GEF | 21 | 90122 | 0 |
| ISCA | 14 | 170355 | -5 |
| LX | 15 | 77654 | 2 |
| Average | 14.25 | 93688 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $22 million in GOLF’s case. Greif, Inc. (NYSE:GEF) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 7 bullish hedge fund positions. Acushnet Holdings Corp. (NYSE:GOLF) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GOLF wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GOLF investors were disappointed as the stock returned 1.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
