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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAmerican Woodmark Corporation (NASDAQ:AMWD) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
American Woodmark Corporation (NASDAQ:AMWD) was in 11 hedge funds' portfolios at the end of March. AMWD has seen a decrease in hedge fund sentiment in recent months. There were 17 hedge funds in our database with AMWD positions at the end of the previous quarter. Our calculations also showed that AMWD 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.
In the financial world there are many methods investors use to analyze their stock investments. A pair of the best methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite money managers can outclass the broader indices by a very impressive amount (see the details here).
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Peter Rathjens of Arrowstreet Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the fresh hedge fund action encompassing American Woodmark Corporation (NASDAQ:AMWD).
Hedge fund activity in American Woodmark Corporation (NASDAQ:AMWD)
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -35% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMWD over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in American Woodmark Corporation (NASDAQ:AMWD), which was worth $4.8 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $2.9 million worth of shares. Renaissance Technologies, Balyasny Asset Management, and PEAK6 Capital Management 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 LFL Advisers allocated the biggest weight to American Woodmark Corporation (NASDAQ:AMWD), around 0.28% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.24 percent of its 13F equity portfolio to AMWD.
Since American Woodmark Corporation (NASDAQ:AMWD) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers who were dropping their full holdings by the end of the first quarter. It's worth mentioning that Richard Driehaus's Driehaus Capital sold off the largest stake of the 750 funds monitored by Insider Monkey, worth close to $6.3 million in stock. David Harding's fund, Winton Capital Management, also dropped its stock, about $5.3 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks similar to American Woodmark Corporation (NASDAQ:AMWD). These stocks are Chase Corporation (NYSE:CCF), HealthStream, Inc. (NASDAQ:HSTM), K12 Inc. (NYSE:LRN), and Unisys Corporation (NYSE:UIS). This group of stocks' market valuations are closest to AMWD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCF,10,67591,1 HSTM,17,46967,4 LRN,20,107274,5 UIS,16,74553,-2 Average,15.75,74096,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $14 million in AMWD's case. K12 Inc. (NYSE:LRN) is the most popular stock in this table. On the other hand Chase Corporation (NYSE:CCF) is the least popular one with only 10 bullish hedge fund positions. American Woodmark Corporation (NASDAQ:AMWD) is not the least popular stock in this group but hedge fund interest is still below 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on AMWD as the stock returned 66% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.