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In this article we will analyze whether Advanced Energy Industries, Inc. (NASDAQ:AEIS) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Advanced Energy Industries, Inc. (NASDAQ:AEIS) has experienced an increase in enthusiasm from smart money lately. Advanced Energy Industries, Inc. (NASDAQ:AEIS) was in 23 hedge funds' portfolios at the end of March. The all time high for this statistic is 30. There were 22 hedge funds in our database with AEIS holdings at the end of December. Our calculations also showed that AEIS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Minhua Zhang of Weld Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to view the new hedge fund action surrounding Advanced Energy Industries, Inc. (NASDAQ:AEIS).
Do Hedge Funds Think AEIS Is A Good Stock To Buy Now?
At first quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in AEIS over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Advanced Energy Industries, Inc. (NASDAQ:AEIS) was held by Royce & Associates, which reported holding $37 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $18.5 million position. Other investors bullish on the company included Fisher Asset Management, Citadel Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Advanced Energy Industries, Inc. (NASDAQ:AEIS), around 0.28% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.25 percent of its 13F equity portfolio to AEIS.
As industrywide interest jumped, specific money managers have jumped into Advanced Energy Industries, Inc. (NASDAQ:AEIS) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the biggest call position in Advanced Energy Industries, Inc. (NASDAQ:AEIS). PEAK6 Capital Management had $5 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $2.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Qing Li's Sciencast Management, Bruce Kovner's Caxton Associates LP, and Minhua Zhang's Weld Capital Management.
Let's go over hedge fund activity in other stocks similar to Advanced Energy Industries, Inc. (NASDAQ:AEIS). We will take a look at JBG SMITH Properties (NYSE:JBGS), Certara, Inc. (NASDAQ:CERT), Endava plc (NYSE:DAVA), Ultrapar Participacoes SA (NYSE:UGP), Adient plc (NYSE:ADNT), M.D.C. Holdings, Inc. (NYSE:MDC), and Tegna Inc (NYSE:TGNA). This group of stocks' market valuations are closest to AEIS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JBGS,11,207465,-5 CERT,12,149884,-7 DAVA,9,80407,-1 UGP,7,25601,-1 ADNT,39,754020,2 MDC,13,36787,-6 TGNA,20,334186,-14 Average,15.9,226907,-4.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $107 million in AEIS's case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 7 bullish hedge fund positions. Advanced Energy Industries, Inc. (NASDAQ:AEIS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AEIS is 54. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately AEIS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AEIS were disappointed as the stock returned -11.8% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.