We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of ABM Industries, Inc. (NYSE:ABM) based on that data.
ABM Industries, Inc. (NYSE:ABM) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that ABM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the key hedge fund action regarding ABM Industries, Inc. (NYSE:ABM).
How are hedge funds trading ABM Industries, Inc. (NYSE:ABM)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in ABM 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.
Among these funds, Arrowstreet Capital held the most valuable stake in ABM Industries, Inc. (NYSE:ABM), which was worth $16.8 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $12.8 million worth of shares. GLG Partners, Renaissance Technologies, and AQR Capital Management 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 Qtron Investments allocated the biggest weight to ABM Industries, Inc. (NYSE:ABM), around 0.16% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.12 percent of its 13F equity portfolio to ABM.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Renaissance Technologies, founded by Jim Simons, created the most outsized position in ABM Industries, Inc. (NYSE:ABM). Renaissance Technologies had $3.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.5 million position during the quarter. The following funds were also among the new ABM investors: Ken Griffin’s Citadel Investment Group, Michael Gelband’s ExodusPoint Capital, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ABM Industries, Inc. (NYSE:ABM) but similarly valued. These stocks are Argo Group International Holdings, Ltd. (NYSE:ARGO), Acadia Realty Trust (NYSE:AKR), Wolverine World Wide, Inc. (NYSE:WWW), and MyoKardia, Inc. (NASDAQ:MYOK). This group of stocks’ market caps are similar to ABM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARGO | 15 | 196940 | -4 |
| AKR | 15 | 77892 | 2 |
| WWW | 19 | 70215 | 7 |
| MYOK | 23 | 785760 | -1 |
| Average | 18 | 282702 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $283 million. That figure was $53 million in ABM’s case. MyoKardia, Inc. (NASDAQ:MYOK) is the most popular stock in this table. On the other hand Argo Group International Holdings, Ltd. (NYSE:ARGO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks ABM Industries, Inc. (NYSE:ABM) is even less popular than ARGO. Hedge funds dodged a bullet by taking a bearish stance towards ABM. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ABM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ABM investors were disappointed as the stock returned 5.1% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
