At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not AECOM (NYSE:ACM) makes for a good investment right now.
Is ACM stock a buy? Prominent investors were reducing their bets on the stock. The number of long hedge fund bets dropped by 2 recently. AECOM (NYSE:ACM) was in 37 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 39. Our calculations also showed that ACM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 39 hedge funds in our database with ACM positions at the end of the third quarter.
In the financial world there are many formulas shareholders can use to appraise their holdings. A couple of the less utilized formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace their index-focused peers by a superb amount (see the details here).
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 we’re going to analyze the fresh hedge fund action regarding AECOM (NYSE:ACM).
Do Hedge Funds Think ACM Is A Good Stock To Buy Now?
At the end of December, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 36 hedge funds with a bullish position in ACM a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Starboard Value LP held the most valuable stake in AECOM (NYSE:ACM), which was worth $386.9 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $62.4 million worth of shares. Renaissance Technologies, Interval Partners, and Islet 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 Starboard Value LP allocated the biggest weight to AECOM (NYSE:ACM), around 9.84% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, designating 4.92 percent of its 13F equity portfolio to ACM.
Because AECOM (NYSE:ACM) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of funds who sold off their entire stakes last quarter. Interestingly, Benjamin Pass’s TOMS Capital said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $46.4 million in stock, and Keith Meister’s Corvex Capital was right behind this move, as the fund dropped about $33.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to AECOM (NYSE:ACM). We will take a look at Berry Global Group Inc (NYSE:BERY), Nielsen Holdings plc (NYSE:NLSN), Kodiak Sciences Inc (NASDAQ:KOD), Voya Financial Inc (NYSE:VOYA), Juniper Networks, Inc. (NYSE:JNPR), Cenovus Energy Inc (NYSE:CVE), and Skillz Inc. (NYSE:SKLZ). 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 |
|---|---|---|---|
| BERY | 34 | 1289609 | -9 |
| NLSN | 34 | 1627449 | 4 |
| KOD | 20 | 2452174 | 0 |
| VOYA | 44 | 1189699 | -5 |
| JNPR | 31 | 414029 | 1 |
| CVE | 23 | 238423 | 5 |
| SKLZ | 33 | 719455 | 33 |
| Average | 31.3 | 1132977 | 4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $1133 million. That figure was $774 million in ACM’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Kodiak Sciences Inc (NASDAQ:KOD) is the least popular one with only 20 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 66.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on ACM as the stock returned 29.3% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Aecom (NYSE:ACM)
Follow Aecom (NYSE:ACM)
Disclosure: None. This article was originally published at Insider Monkey.
