Is ACCO Brands Corporation (ACCO) A Good Stock To Buy?
We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of ACCO Brands Corporation (NYSE:ACCO) based on that data.
Hedge fund interest in ACCO Brands Corporation (NYSE:ACCO) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as A10 Networks Inc (NYSE:ATEN), Vermilion Energy Inc (NYSE:VET), and RPT Realty (NYSE:RPT) to gather more data points. Our calculations also showed that ACCO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_30621" align="aligncenter" width="392"]
Cliff Asness of AQR Capital Management[/caption]
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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the latest hedge fund action surrounding ACCO Brands Corporation (NYSE:ACCO).
How are hedge funds trading ACCO Brands Corporation (NYSE:ACCO)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in ACCO 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.
More specifically, Arrowstreet Capital was the largest shareholder of ACCO Brands Corporation (NYSE:ACCO), with a stake worth $8.4 million reported as of the end of September. Trailing Arrowstreet Capital was D E Shaw, which amassed a stake valued at $4.7 million. Two Sigma Advisors, AQR Capital Management, and Marshall Wace LLP 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 ACCO Brands Corporation (NYSE:ACCO), around 0.16% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to ACCO.
Due to the fact that ACCO Brands Corporation (NYSE:ACCO) has experienced falling interest from the smart money, it's easy to see that there lies a certain "tier" of fund managers who were dropping their entire stakes heading into Q4. At the top of the heap, Noam Gottesman's GLG Partners dumped the biggest stake of all the hedgies tracked by Insider Monkey, comprising about $0.4 million in stock, and Lee Ainslie's Maverick Capital was right behind this move, as the fund dumped about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to ACCO Brands Corporation (NYSE:ACCO). These stocks are A10 Networks Inc (NYSE:ATEN), Vermilion Energy Inc (NYSE:VET), RPT Realty (NYSE:RPT), and Assembly Biosciences Inc (NASDAQ:ASMB). This group of stocks' market valuations are closest to ACCO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATEN,19,110335,1 VET,8,1314,0 RPT,12,16984,-1 ASMB,18,179031,-2 Average,14.25,76916,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $27 million in ACCO's case. A10 Networks Inc (NYSE:ATEN) is the most popular stock in this table. On the other hand Vermilion Energy Inc (NYSE:VET) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on ACCO, though not to the same extent, as the stock returned 26.6% during the first two months and twenty two days of the second quarter and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
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