Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of AZZ Incorporated (NYSE:AZZ) based on that data.
AZZ Incorporated (NYSE:AZZ) was in 14 hedge funds’ portfolios at the end of the second quarter of 2019. AZZ has experienced a decrease in support from the world’s most elite money managers recently. There were 16 hedge funds in our database with AZZ positions at the end of the previous quarter. Our calculations also showed that AZZ isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are viewed as worthless, old financial vehicles of yesteryear. While there are more than 8000 funds in operation today, We look at the crème de la crème of this group, approximately 750 funds. These hedge fund managers control the majority of the hedge fund industry’s total asset base, and by shadowing their highest performing stock picks, Insider Monkey has uncovered many investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the recent hedge fund action regarding AZZ Incorporated (NYSE:AZZ).
What does smart money think about AZZ Incorporated (NYSE:AZZ)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the first quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in AZZ a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Rutabaga Capital Management held the most valuable stake in AZZ Incorporated (NYSE:AZZ), which was worth $10.9 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $9.5 million worth of shares. Moreover, GAMCO Investors, D E Shaw, and Millennium Management were also bullish on AZZ Incorporated (NYSE:AZZ), allocating a large percentage of their portfolios to this stock.
Since AZZ Incorporated (NYSE:AZZ) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few fund managers who were dropping their full holdings in the second quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising about $1.6 million in stock. David Costen Haley’s fund, HBK Investments, also cut its stock, about $0.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as AZZ Incorporated (NYSE:AZZ) but similarly valued. We will take a look at Atkore International Group Inc. (NYSE:ATKR), Harmony Gold Mining Company Limited (NYSE:HMY), Intrexon Corp (NASDAQ:XON), and FormFactor, Inc. (NASDAQ:FORM). This group of stocks’ market valuations are closest to AZZ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATKR | 17 | 90536 | -2 |
| HMY | 10 | 40696 | 1 |
| XON | 10 | 82829 | 2 |
| FORM | 14 | 44283 | 3 |
| Average | 12.75 | 64586 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $43 million in AZZ’s case. Atkore International Group Inc. (NYSE:ATKR) is the most popular stock in this table. On the other hand Harmony Gold Mining Company Limited (NYSE:HMY) is the least popular one with only 10 bullish hedge fund positions. AZZ Incorporated (NYSE:AZZ) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AZZ wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AZZ were disappointed as the stock returned -5% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
