Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Atkore International Group Inc (NYSE:ATKR).
Is Atkore International Group Inc (NYSE:ATKR) a sound investment right now? The best stock pickers are indeed getting less optimistic. The number of long hedge fund positions dropped by 2 lately. ATKRwas in 10 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with ATKR positions 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 Agree Realty Corporation (NYSE:ADC), Gibraltar Industries Inc (NASDAQ:ROCK), and The Buckle, Inc. (NYSE:BKE) to gather more data points.
Follow Atkore Inc. (NYSE:ATKR)
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a gander at the latest action surrounding Atkore International Group Inc (NYSE:ATKR).
What have hedge funds been doing with Atkore International Group Inc (NYSE:ATKR)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2016. On the other hand, there were a total of 0 hedge funds with a bullish position in ATKR at the beginning of this year. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, John A. Levin’s Levin Capital Strategies has the biggest position in Atkore International Group Inc (NYSE:ATKR), worth close to $42.4 million, amounting to 0.6% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, which holds a $22 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions include Anand Parekh’s Alyeska Investment Group, Millennium Management, one of the 10 largest hedge funds in the world and Jeffrey Moskowitz’s Harvey Partners. We should note that Harvey Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Atkore International Group Inc (NYSE:ATKR) has sustained falling interest from the aggregate hedge fund industry, we can see that there were a few funds who were dropping their full holdings in the third quarter. Interestingly, Richard S. Meisenberg’s ACK Asset Management dropped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $4.9 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund dumped about $4 million worth of shares.
Let’s go over hedge fund activity in other stocks similar to Atkore International Group Inc (NYSE:ATKR). These stocks are Agree Realty Corporation (NYSE:ADC), Gibraltar Industries Inc (NASDAQ:ROCK), The Buckle, Inc. (NYSE:BKE), and BNC Bancorp (NASDAQ:BNCN). This group of stocks’ market valuations are closest to ATKR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADC | 13 | 39453 | 3 |
| ROCK | 23 | 144533 | 2 |
| BKE | 15 | 114776 | 3 |
| BNCN | 14 | 58271 | -1 |
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $100 million in ATKR’s case. Gibraltar Industries Inc (NASDAQ:ROCK) is the most popular stock in this table. On the other hand Agree Realty Corporation (NYSE:ADC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Atkore International Group Inc (NYSE:ATKR) is even less popular than ADC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
