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Here is What Hedge Funds Think About Apogee Enterprises, Inc. (APOG)

Nina Todic

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Apogee Enterprises, Inc. (NASDAQ:APOG) based on that data.

Hedge fund interest in Apogee Enterprises, Inc. (NASDAQ:APOG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare APOG to other stocks including ePlus Inc. (NASDAQ:PLUS), H&E Equipment Services, Inc. (NASDAQ:HEES), and 2U Inc (NASDAQ:TWOU) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/caption]

Chuck Royce

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's analyze the fresh hedge fund action encompassing Apogee Enterprises, Inc. (NASDAQ:APOG).

How have hedgies been trading Apogee Enterprises, Inc. (NASDAQ:APOG)?

Heading into the fourth quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in APOG over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Engaged Capital held the most valuable stake in Apogee Enterprises, Inc. (NASDAQ:APOG), which was worth $65.9 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $19.5 million worth of shares. Headlands Capital, Millennium Management, and Arrowstreet Capital 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 Headlands Capital allocated the biggest weight to Apogee Enterprises, Inc. (NASDAQ:APOG), around 9.01% of its 13F portfolio. Engaged Capital is also relatively very bullish on the stock, designating 8.95 percent of its 13F equity portfolio to APOG.

Since Apogee Enterprises, Inc. (NASDAQ:APOG) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there was a specific group of funds who sold off their entire stakes heading into Q4. At the top of the heap, Renaissance Technologies sold off the largest stake of the "upper crust" of funds tracked by Insider Monkey, valued at about $1.7 million in stock. Joel Greenblatt's fund, Gotham Asset Management, also dropped its stock, about $0.5 million worth. These bearish behaviors are interesting, as total 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 Apogee Enterprises, Inc. (NASDAQ:APOG). These stocks are ePlus Inc. (NASDAQ:PLUS), H&E Equipment Services, Inc. (NASDAQ:HEES), 2U Inc (NASDAQ:TWOU), and Weis Markets, Inc. (NYSE:WMK). This group of stocks' market values resemble APOG's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLUS,12,43114,0 HEES,13,52420,1 TWOU,14,88368,0 WMK,15,64020,2 Average,13.5,61981,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $130 million in APOG's case. Weis Markets, Inc. (NYSE:WMK) is the most popular stock in this table. On the other hand ePlus Inc. (NASDAQ:PLUS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Apogee Enterprises, Inc. (NASDAQ:APOG) is even less popular than PLUS. Hedge funds dodged a bullet by taking a bearish stance towards APOG. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately APOG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); APOG investors were disappointed as the stock returned -1.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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

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