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Here is What Hedge Funds Think About Albertsons Companies, Inc. (ACI)

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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Albertsons Companies, Inc. (NYSE:ACI).

Hedge fund interest in Albertsons Companies, Inc. (NYSE:ACI) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ACI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ACI to other stocks including Vereit Inc (NYSE:VER), Robert Half International Inc. (NYSE:RHI), and Natera Inc (NASDAQ:NTRA) to get a better sense of its popularity.

In today’s marketplace there are plenty of methods investors employ to value stocks. A couple of the most innovative methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top investment managers can beat the market by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Stephen Feinberg Cerberus Capital
Stephen Feinberg Cerberus Capital

Stephen Feinberg of Cerberus Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 check out the recent hedge fund action regarding Albertsons Companies, Inc. (NYSE:ACI).

Do Hedge Funds Think ACI Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in ACI 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.

Among these funds, Cerberus Capital Management held the most valuable stake in Albertsons Companies, Inc. (NYSE:ACI), which was worth $2750.4 million at the end of the fourth quarter. On the second spot was Brigade Capital which amassed $13.1 million worth of shares. Citadel Investment Group, Verdad Advisers, and Citadel Investment Group 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 Cerberus Capital Management allocated the biggest weight to Albertsons Companies, Inc. (NYSE:ACI), around 76.09% of its 13F portfolio. Verdad Advisers is also relatively very bullish on the stock, designating 3.38 percent of its 13F equity portfolio to ACI.

Because Albertsons Companies, Inc. (NYSE:ACI) has witnessed declining sentiment from the smart money, we can see that there was a specific group of funds that elected to cut their full holdings heading into Q2. It's worth mentioning that Anand Parekh's Alyeska Investment Group cut the largest investment of the 750 funds monitored by Insider Monkey, totaling about $13.5 million in stock. Daniel S. Och's fund, OZ Management, also dumped its stock, about $3.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks similar to Albertsons Companies, Inc. (NYSE:ACI). We will take a look at Vereit Inc (NYSE:VER), Robert Half International Inc. (NYSE:RHI), Natera Inc (NASDAQ:NTRA), Churchill Downs Incorporated (NASDAQ:CHDN), Kingsoft Cloud Holdings Limited (NASDAQ:KC), Alleghany Corporation (NYSE:Y), and SEI Investments Company (NASDAQ:SEIC). All of these stocks' market caps are closest to ACI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VER,27,664502,4 RHI,27,284866,0 NTRA,41,1222395,-5 CHDN,19,413255,-6 KC,16,92226,-4 Y,34,359891,0 SEIC,27,304623,-6 Average,27.3,477394,-2.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $477 million. That figure was $2808 million in ACI's case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Kingsoft Cloud Holdings Limited (NASDAQ:KC) is the least popular one with only 16 bullish hedge fund positions. Albertsons Companies, Inc. (NYSE:ACI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ACI is 30. 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 negative signal and 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 surpassed the market again by 7.7 percentage points. Unfortunately ACI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ACI investors were disappointed as the stock returned 4.8% 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.