Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Aegion Corp (NASDAQ:AEGN) .
Is Aegion Corp (NASDAQ:AEGN) an exceptional investment today? Investors who are in the know are altogether taking a bearish view. The number of bullish hedge fund positions went down by 2 lately. AEGN was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with AEGN holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Qiwi PLC (NASDAQ:QIWI), Teekay Corporation (NYSE:TK), and EarthLink, Inc. (NASDAQ:ELNK) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
With all of this in mind, we’re going to take a peek at the key action regarding Aegion Corp (NASDAQ:AEGN).
How are hedge funds trading Aegion Corp (NASDAQ:AEGN)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in AEGN over the last 5 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Aegion Corp (NASDAQ:AEGN). Royce & Associates has a $17.2 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, holding a $8.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions consist of Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Mario Gabelli’s GAMCO Investors. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.