Is AYI Stock A Buy or Sell?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Acuity Brands, Inc. (NYSE:AYI) in this article.

Is AYI stock a buy? Hedge funds were getting less optimistic. The number of long hedge fund bets shrunk by 9 in recent months. Acuity Brands, Inc. (NYSE:AYI) was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 38. Our calculations also showed that AYI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 38 hedge funds in our database with AYI holdings at the end of September.

In the 21st century investor’s toolkit there are many gauges investors can use to analyze stocks. A couple of the most useful gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat the S&P 500 by a significant amount (see the details here).

Bill Miller of Miller Value Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 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. Keeping this in mind we’re going to take a peek at the latest hedge fund action regarding Acuity Brands, Inc. (NYSE:AYI).

Do Hedge Funds Think AYI Is A Good Stock To Buy Now?

At Q4’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in AYI a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

More specifically, Generation Investment Management was the largest shareholder of Acuity Brands, Inc. (NYSE:AYI), with a stake worth $404.5 million reported as of the end of December. Trailing Generation Investment Management was Renaissance Technologies, which amassed a stake valued at $94.6 million. Miller Value Partners, Paradice Investment Management, and AQR Capital 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 Paradice Investment Management allocated the biggest weight to Acuity Brands, Inc. (NYSE:AYI), around 3.8% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, setting aside 2.42 percent of its 13F equity portfolio to AYI.

Since Acuity Brands, Inc. (NYSE:AYI) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of money managers who sold off their entire stakes last quarter. Interestingly, Brian Sheehy’s Iszo Capital cut the largest position of the “upper crust” of funds watched by Insider Monkey, worth close to $11.9 million in stock, and Javier Velazquez’s Albar Capital was right behind this move, as the fund dumped about $11.9 million worth. These moves are important to note, as aggregate hedge fund interest fell by 9 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Acuity Brands, Inc. (NYSE:AYI) but similarly valued. We will take a look at Evercore Inc. (NYSE:EVR), Lazard Ltd (NYSE:LAZ), Envestnet Inc (NYSE:ENV), Madison Square Garden Sports Corp. (NYSE:MSGS), Rush Street Interactive, Inc. (NYSE:RSI), Open Lending Corporation (NASDAQ:LPRO), and Companhia Energética de Minas Gerais (NYSE:CIG). All of these stocks’ market caps are similar to AYI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $438 million. That figure was $810 million in AYI’s case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Companhia Energética de Minas Gerais (NYSE:CIG) is the least popular one with only 12 bullish hedge fund positions. Acuity Brands, Inc. (NYSE:AYI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AYI is 45.5. 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on AYI as the stock returned 42.8% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.