Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards AECOM (NYSE:ACM) at the end of the third quarter and determine whether the smart money was really smart about this stock.
AECOM (NYSE:ACM) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ACM investors should be aware of an increase in enthusiasm from smart money in recent months. There were 32 hedge funds in our database with ACM holdings at the end of June. Our calculations also showed that ACM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to check out the fresh hedge fund action surrounding AECOM (NYSE:ACM).
Matthew Hulsizer of PEAK6 Capital
Do Hedge Funds Think ACM Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in ACM over the last 25 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Starboard Value LP was the largest shareholder of AECOM (NYSE:ACM), with a stake worth $463 million reported as of the end of September. Trailing Starboard Value LP was TOMS Capital, which amassed a stake valued at $127 million. TOMS Capital, Millennium Management, and Citadel Investment Group 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 Starboard Value LP allocated the biggest weight to AECOM (NYSE:ACM), around 8.47% of its 13F portfolio. TOMS Capital is also relatively very bullish on the stock, setting aside 7.3 percent of its 13F equity portfolio to ACM.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. TOMS Capital, managed by Benjamin Pass, created the most valuable call position in AECOM (NYSE:ACM). TOMS Capital had $127 million invested in the company at the end of the quarter. Benjamin Pass’s TOMS Capital also made a $67.1 million investment in the stock during the quarter. The following funds were also among the new ACM investors: Dmitry Balyasny’s Balyasny Asset Management, Steve Cohen’s Point72 Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to AECOM (NYSE:ACM). These stocks are Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), Algonquin Power & Utilities Corp. (NYSE:AQN), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Sunrun Inc (NASDAQ:RUN), Ascendis Pharma A/S (NASDAQ:ASND), Globe Life Inc. (NYSE:GL), and Syneos Health, Inc. (NASDAQ:SYNH). All of these stocks’ market caps resemble ACM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BHVN | 33 | 1063983 | 6 |
| AQN | 15 | 152646 | -9 |
| NBIX | 31 | 980578 | -1 |
| RUN | 37 | 1677910 | -8 |
| ASND | 23 | 2827508 | -6 |
| GL | 27 | 775771 | -1 |
| SYNH | 33 | 474708 | 0 |
| Average | 28.4 | 1136158 | -2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $1136 million. That figure was $784 million in ACM’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks AECOM (NYSE:ACM) is more popular among hedge funds. Our overall hedge fund sentiment score for ACM is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on ACM as the stock returned 9.7% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
