Amid an overall bull market, many stocks that smart money investors were collectively bullish on 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. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.4% through the end of November and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
ACCO Brands Corporation (NYSE:ACCO) investors should be aware of an increase in hedge fund interest lately. Our calculations also showed that ACCO 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 several gauges stock traders put to use to appraise publicly traded companies. A duo of the most innovative gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outpace the S&P 500 by a superb margin (see the details here).
[caption id="attachment_365194" align="aligncenter" width="450"] David E. Shaw of D.E. Shaw[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's take a look at the new hedge fund action regarding ACCO Brands Corporation (NYSE:ACCO).
Hedge fund activity in ACCO Brands Corporation (NYSE:ACCO)
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in ACCO a year ago. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in ACCO Brands Corporation (NYSE:ACCO) was held by D E Shaw, which reported holding $13.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $9.1 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to ACCO Brands Corporation (NYSE:ACCO), around 0.33% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.17 percent of its 13F equity portfolio to ACCO.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into ACCO Brands Corporation (NYSE:ACCO) headfirst. Bailard Inc, managed by Thomas Bailard, initiated the most outsized position in ACCO Brands Corporation (NYSE:ACCO). Bailard Inc had $0.4 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new ACCO position is Minhua Zhang's Weld Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as ACCO Brands Corporation (NYSE:ACCO) but similarly valued. We will take a look at HeadHunter Group PLC (NASDAQ:HHR), iHeartMedia, Inc. (NASDAQ:IHRT), 3D Systems Corporation (NYSE:DDD), and Astronics Corporation (NASDAQ:ATRO). This group of stocks' market caps match ACCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HHR,8,73959,-4 IHRT,26,178664,26 DDD,12,39120,1 ATRO,13,103363,-5 Average,14.75,98777,4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $55 million in ACCO's case. iHeartMedia, Inc. (NASDAQ:IHRT) is the most popular stock in this table. On the other hand HeadHunter Group PLC (NASDAQ:HHR) is the least popular one with only 8 bullish hedge fund positions. ACCO Brands Corporation (NYSE:ACCO) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ACCO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ACCO were disappointed as the stock returned -6.6% 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.