We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. 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 Aegion Corporation (NASDAQ:AEGN).
Aegion Corporation (NASDAQ:AEGN) has seen an increase in hedge fund interest recently. AEGN was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with AEGN positions at the end of the previous quarter. Our calculations also showed that AEGN 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Roger Ibbotson of Zebra 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. We’re going to review the fresh hedge fund action encompassing Aegion Corporation (NASDAQ:AEGN).
Hedge fund activity in Aegion Corporation (NASDAQ:AEGN)
Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 80% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in AEGN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Aegion Corporation (NASDAQ:AEGN), with a stake worth $9.9 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $9.2 million. Millennium Management, GAMCO Investors, and Two Sigma 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 Zebra Capital Management allocated the biggest weight to Aegion Corporation (NASDAQ:AEGN), around 0.26% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.08 percent of its 13F equity portfolio to AEGN.
Now, some big names have jumped into Aegion Corporation (NASDAQ:AEGN) headfirst. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the biggest position in Aegion Corporation (NASDAQ:AEGN). Marshall Wace had $0.7 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Roger Ibbotson’s Zebra Capital Management.
Let’s go over hedge fund activity in other stocks similar to Aegion Corporation (NASDAQ:AEGN). These stocks are Silvercorp Metals Inc. (NYSE:SVM), Universal Logistics Holdings, Inc. (NASDAQ:ULH), Casa Systems, Inc. (NASDAQ:CASA), and TPI Composites, Inc. (NASDAQ:TPIC). This group of stocks’ market values are closest to AEGN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SVM | 9 | 36559 | 0 |
| ULH | 12 | 27543 | -1 |
| CASA | 11 | 18858 | -2 |
| TPIC | 14 | 97850 | -2 |
| Average | 11.5 | 45203 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $25 million in AEGN’s case. TPI Composites, Inc. (NASDAQ:TPIC) is the most popular stock in this table. On the other hand Silvercorp Metals Inc. (NYSE:SVM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Aegion Corporation (NASDAQ:AEGN) is even less popular than SVM. Hedge funds dodged a bullet by taking a bearish stance towards AEGN. 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 AEGN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AEGN investors were disappointed as the stock returned 1.3% 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.
