Is Acuity Brands, Inc. (NYSE:AYI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Acuity Brands, Inc. (NYSE:AYI) a buy right now? The smart money is betting on the stock. The number of long hedge fund positions improved by 7 recently. Our calculations also showed that AYI isn't among the 30 most popular stocks among hedge funds. AYI was in 35 hedge funds' portfolios at the end of September. There were 28 hedge funds in our database with AYI positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to the beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the latest hedge fund action surrounding Acuity Brands, Inc. (NYSE:AYI).
What have hedge funds been doing with Acuity Brands, Inc. (NYSE:AYI)?
Heading into the fourth quarter of 2018, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AYI over the last 13 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the largest position in Acuity Brands, Inc. (NYSE:AYI). Generation Investment Management has a $580.3 million position in the stock, comprising 4.6% of its 13F portfolio. The second largest stake is held by International Value Advisers, led by Charles de Vaulx, holding a $240.1 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Ken Griffin's Citadel Investment Group, Israel Englander's Millennium Management and Phill Gross and Robert Atchinson's Adage Capital Management.
Consequently, some big names were leading the bulls' herd. Kingdon Capital, managed by Mark Kingdon, initiated the largest position in Acuity Brands, Inc. (NYSE:AYI). Kingdon Capital had $11 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $7.9 million position during the quarter. The other funds with new positions in the stock are Jonathan Barrett and Paul Segal's Luminus Management, Zach Schreiber's Point State Capital, and Gregg Moskowitz's Interval Partners.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Acuity Brands, Inc. (NYSE:AYI) but similarly valued. We will take a look at Gildan Activewear Inc (NYSE:GIL), EQGP Holdings, LP (NYSE:EQGP), CyrusOne Inc (NASDAQ:CONE), and Phillips 66 Partners LP (NYSE:PSXP). This group of stocks' market caps are closest to AYI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GIL,18,271699,3 EQGP,5,23037,1 CONE,24,224805,5 PSXP,4,7701,2 [/table]
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 $132 million. That figure was $1284 million in AYI's case. CyrusOne Inc (NASDAQ:CONE) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Acuity Brands, Inc. (NYSE:AYI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.