Is Acxiom Corporation (ACXM) Going to Burn These Hedge Funds?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Acxiom Corporation (NASDAQ:ACXM).

Is Acxiom Corporation (NASDAQ:ACXM) a bargain? The best stock pickers are taking a bullish view. The number of long hedge fund positions improved by 1 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Advanced Drainage Systems Inc (NYSE:WMS), Revlon Inc (NYSE:REV), and American States Water Co (NYSE:AWR) to gather more data points.

At the moment there are several indicators investors can use to evaluate publicly traded companies. Some of the less utilized indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the best money managers can beat the S&P 500 by a healthy margin (see the details here).

Keeping this in mind, let’s check out the fresh action encompassing Acxiom Corporation (NASDAQ:ACXM).

What have hedge funds been doing with Acxiom Corporation (NASDAQ:ACXM)?

Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, up by 6% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Daruma Asset Management, managed by Mariko Gordon, holds the most valuable position in Acxiom Corporation (NASDAQ:ACXM). The fund reportedly holds a $70.5 million position in the stock, comprising 4.3% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $54.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Robert G. Moses’s RGM Capital, Lee Hicks and Jan Koerner’s Park Presidio Capital and D. E. Shaw’s D E Shaw.

Now, key hedge funds were leading the bulls’ herd. RGM Capital, managed by Robert G. Moses, created the largest position in Acxiom Corporation (NASDAQ:ACXM), worth an estimated $30.5 million at the end of the quarter. Lee Hicks and Jan Koerner’s Park Presidio Capital also made a $25.1 million investment in the stock during the quarter. The other funds with brand new ACXM positions are Joseph A. Jolson’s Harvest Capital Strategies, Peter Muller’s PDT Partners, and Chao Ku’s Nine Chapters Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Acxiom Corporation (NASDAQ:ACXM) but similarly valued. We will take a look at Advanced Drainage Systems Inc (NYSE:WMS), Revlon Inc (NYSE:REV), American States Water Co (NYSE:AWR), and Greif, Inc. (NYSE:GEF). All of these stocks’ market caps resemble ACXM’s market cap.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. In the case of ACXM, that figure significantly exceeds the average and stands at $252 million. Greif, Inc. (NYSE:GEF) is the most popular stock in this table. On the other hand American States Water Co (NYSE:AWR) is the least popular one with only 5 bullish hedge fund positions. Acxiom Corporation (NASDAQ:ACXM) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GEF might be a better candidate to consider a long position.