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

Nina Todic

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 20% in the first 9 months of this year (through September 30th). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 24% during the same 9-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds' consensus stock picks generate superior risk-adjusted returns. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Apogee Enterprises, Inc. (NASDAQ:APOG).

Apogee Enterprises, Inc. (NASDAQ:APOG) was in 12 hedge funds' portfolios at the end of June. APOG investors should be aware of an increase in support from the world's most elite money managers in recent months. There were 11 hedge funds in our database with APOG positions at the end of the previous quarter. Our calculations also showed that APOG isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Glenn Welling Engaged Capital

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's view the latest hedge fund action surrounding Apogee Enterprises, Inc. (NASDAQ:APOG).

Hedge fund activity in Apogee Enterprises, Inc. (NASDAQ:APOG)

At Q2's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in APOG a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with APOG Positions

More specifically, Engaged Capital was the largest shareholder of Apogee Enterprises, Inc. (NASDAQ:APOG), with a stake worth $73.4 million reported as of the end of March. Trailing Engaged Capital was Royce & Associates, which amassed a stake valued at $31.2 million. Headlands Capital, Arrowstreet Capital, and Skylands Capital were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, specific money managers have jumped into Apogee Enterprises, Inc. (NASDAQ:APOG) headfirst. Renaissance Technologies assembled the most outsized position in Apogee Enterprises, Inc. (NASDAQ:APOG). Renaissance Technologies had $1.7 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also initiated a $0.5 million position during the quarter. The only other fund with a brand new APOG position is Michael Gelband's ExodusPoint Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Apogee Enterprises, Inc. (NASDAQ:APOG) but similarly valued. We will take a look at Knoll Inc (NYSE:KNL), GasLog Ltd (NYSE:GLOG), Triumph Group Inc (NYSE:TGI), and Qutoutiao Inc. (NASDAQ:QTT). This group of stocks' market valuations are closest to APOG's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KNL,16,66709,-3 GLOG,13,47609,2 TGI,12,62143,0 QTT,7,32603,2 Average,12,52266,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $141 million in APOG's case. Knoll Inc (NYSE:KNL) is the most popular stock in this table. On the other hand Qutoutiao Inc. (NASDAQ:QTT) is the least popular one with only 7 bullish hedge fund positions. Apogee Enterprises, Inc. (NASDAQ:APOG) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately APOG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); APOG investors were disappointed as the stock returned -9.9% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.

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

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