Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Actuant Corporation (NYSE:ATU) changed recently.
Actuant Corporation (NYSE:ATU) was in 12 hedge funds' portfolios at the end of the second quarter of 2019. ATU investors should pay attention to an increase in enthusiasm from smart money of late. There were 9 hedge funds in our database with ATU positions at the end of the previous quarter. Our calculations also showed that ATU 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To most traders, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds in operation today, Our researchers hone in on the masters of this group, about 750 funds. It is estimated that this group of investors preside over bulk of the hedge fund industry's total capital, and by paying attention to their best picks, Insider Monkey has figured out numerous investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points a 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. We're going to take a peek at the latest hedge fund action regarding Actuant Corporation (NYSE:ATU).
What does smart money think about Actuant Corporation (NYSE:ATU)?
At Q2's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in ATU over the last 16 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Southeastern Asset Management, managed by Mason Hawkins, holds the biggest position in Actuant Corporation (NYSE:ATU). Southeastern Asset Management has a $146.4 million position in the stock, comprising 2.4% of its 13F portfolio. On Southeastern Asset Management's heels is Richard S. Pzena of Pzena Investment Management, with a $107 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other professional money managers that are bullish consist of Jeffrey Bronchick's Cove Street Capital, Renaissance Technologies and Paul Marshall and Ian Wace's Marshall Wace LLP.
As industrywide interest jumped, specific money managers have jumped into Actuant Corporation (NYSE:ATU) headfirst. ExodusPoint Capital, managed by Michael Gelband, created the most outsized position in Actuant Corporation (NYSE:ATU). ExodusPoint Capital had $0.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $0.4 million investment in the stock during the quarter. The other funds with brand new ATU positions are Hoon Kim's Quantinno Capital and Matthew Hulsizer's PEAK6 Capital Management.
Let's go over hedge fund activity in other stocks similar to Actuant Corporation (NYSE:ATU). These stocks are Arcos Dorados Holdings Inc. (NYSE:ARCO), Sally Beauty Holdings, Inc. (NYSE:SBH), Suburban Propane Partners LP (NYSE:SPH), and Safety Insurance Group, Inc. (NASDAQ:SAFT). This group of stocks' market values resemble ATU's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARCO,14,123488,-4 SBH,20,117843,1 SPH,4,96526,-1 SAFT,10,47551,-1 Average,12,96352,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $287 million in ATU's case. Sally Beauty Holdings, Inc. (NYSE:SBH) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 4 bullish hedge fund positions. Actuant Corporation (NYSE:ATU) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 ATU wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ATU investors were disappointed as the stock returned -11.4% 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.