Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at American Woodmark Corporation (NASDAQ:AMWD) from the perspective of those elite funds.
American Woodmark Corporation (NASDAQ:AMWD) has seen an increase in enthusiasm from smart money recently. AMWD was in 17 hedge funds' portfolios at the end of the third quarter of 2018. There were 9 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.
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 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.
Let's take a look at the latest hedge fund action surrounding American Woodmark Corporation (NASDAQ:AMWD).
How have hedgies been trading American Woodmark Corporation (NASDAQ:AMWD)?
At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 89% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMWD over the last 13 quarters. 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, Millennium Management held the most valuable stake in American Woodmark Corporation (NASDAQ:AMWD), which was worth $17.2 million at the end of the third quarter. On the second spot was Lodge Hill Capital which amassed $12.9 million worth of shares. Moreover, Renaissance Technologies, Royce & Associates, and Hudson Bay Capital Management were also bullish on American Woodmark Corporation (NASDAQ:AMWD), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were leading the bulls' herd. Lodge Hill Capital, managed by Clint Murray, created the most valuable position in American Woodmark Corporation (NASDAQ:AMWD). Lodge Hill Capital had $12.9 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Noam Gottesman's GLG Partners, and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as American Woodmark Corporation (NASDAQ:AMWD) but similarly valued. These stocks are CURO Group Holdings Corp. (NYSE:CURO), OSI Systems, Inc. (NASDAQ:OSIS), ProPetro Holding Corp. (NYSE:PUMP), and Seacoast Banking Corporation of Florida (NASDAQ:SBCF). All of these stocks' market caps are similar to AMWD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CURO,16,184077,-2 OSIS,9,36006,1 PUMP,21,217145,5 SBCF,9,48108,-3 Average,13.75,121334,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $56 million in AMWD's case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand OSI Systems, Inc. (NASDAQ:OSIS) is the least popular one with only 9 bullish hedge fund positions. American Woodmark Corporation (NASDAQ:AMWD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard PUMP might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.