Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to AECOM (NYSE:ACM) changed recently.
Is ACM a good stock to buy now? AECOM (NYSE:ACM) shareholders have witnessed an increase in enthusiasm from smart money lately. AECOM (NYSE:ACM) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 38 hedge funds in our database with ACM holdings at the end of June. Our calculations also showed that ACM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are viewed as worthless, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, We choose to focus on the crème de la crème of this group, approximately 850 funds. These investment experts direct most of the hedge fund industry’s total capital, and by following their highest performing stock picks, Insider Monkey has formulated a number of investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Keith Meister of Corvex Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s take a peek at the recent hedge fund action regarding AECOM (NYSE:ACM).
Do Hedge Funds Think ACM Is A Good Stock To Buy Now?
At third quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in ACM 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, Starboard Value LP held the most valuable stake in AECOM (NYSE:ACM), which was worth $323.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $69 million worth of shares. TOMS Capital, TOMS Capital, and TIG Advisors 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 Starboard Value LP allocated the biggest weight to AECOM (NYSE:ACM), around 9.6% of its 13F portfolio. TOMS Capital is also relatively very bullish on the stock, dishing out 6.93 percent of its 13F equity portfolio to ACM.
Consequently, key hedge funds have been driving this bullishness. TOMS Capital, managed by Benjamin Pass, established the largest position in AECOM (NYSE:ACM). TOMS Capital had $46.4 million invested in the company at the end of the quarter. Keith Meister’s Corvex Capital also initiated a $33.7 million position during the quarter. The following funds were also among the new ACM investors: Joseph Samuels’s Islet Management, James Dinan’s York Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to AECOM (NYSE:ACM). We will take a look at Aramark (NYSE:ARMK), HD Supply Holdings Inc (NASDAQ:HDS), Carlisle Companies, Inc. (NYSE:CSL), GrubHub Inc (NYSE:GRUB), Lamar Advertising Company (NASDAQ:LAMR), Dolby Laboratories, Inc. (NYSE:DLB), and Novavax, Inc. (NASDAQ:NVAX). This group of stocks’ market values are similar to ACM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARMK | 40 | 881207 | 6 |
| HDS | 41 | 1195088 | -3 |
| CSL | 28 | 191780 | -10 |
| GRUB | 49 | 1607648 | -3 |
| LAMR | 37 | 380864 | -7 |
| DLB | 35 | 596301 | 7 |
| NVAX | 36 | 611401 | 18 |
| Average | 38 | 780613 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $781 million. That figure was $785 million in ACM’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 28 bullish hedge fund positions. AECOM (NYSE:ACM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACM is 62.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on ACM as the stock returned 14.2% since the end of Q3 (through 12/18) 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.
