It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Aecom (NYSE:ACM).
Hedge fund interest in Aecom (NYSE:ACM) shares was flat at the end of last quarter. This is usually a negative indicator. 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 The Toro Company (NYSE:TTC), AutoNation, Inc. (NYSE:AN), and Acadia Healthcare Company Inc (NASDAQ:ACHC) to gather more data points.
Follow Aecom (NYSE:ACM)
Follow Aecom (NYSE:ACM)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, we’re going to check out the fresh action surrounding Aecom (NYSE:ACM).
How have hedgies been trading Aecom (NYSE:ACM)?
Heading into the fourth quarter of 2016, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. With hedge funds’ capital changing hands, 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, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in Aecom (NYSE:ACM). According to regulatory filings, the fund has an $83.1 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is Greenlight Capital, led by David Einhorn, holding a $59.6 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish encompass Edgar Wachenheim’s Greenhaven Associates, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Robert B. Gillam’s McKinley Capital Management.
Judging by the fact that Aecom (NYSE:ACM) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers who sold off their full holdings in the third quarter. Intriguingly, Daniel Lascano’s Lomas Capital Management sold off the biggest stake of the 700 funds tracked by Insider Monkey, valued at close to $11.8 million in stock, and Bruce Kovner’s Caxton Associates LP was right behind this move, as the fund dumped about $10.7 million worth of ACM shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aecom (NYSE:ACM) but similarly valued. These stocks are The Toro Company (NYSE:TTC), AutoNation, Inc. (NYSE:AN), Acadia Healthcare Company Inc (NASDAQ:ACHC), and National Fuel Gas Co. (NYSE:NFG). This group of stocks’ market valuations are closest to ACM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTC | 23 | 270776 | 5 |
| AN | 25 | 1167090 | -3 |
| ACHC | 22 | 449275 | 3 |
| NFG | 21 | 256754 | 2 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $536 million. That figure was $338 million in ACM’s case. AutoNation, Inc. (NYSE:AN) is the most popular stock in this table. On the other hand National Fuel Gas Co. (NYSE:NFG) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Aecom (NYSE:ACM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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