Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Aceto Corporation (NASDAQ:ACET) the right investment to pursue these days? The smart money is turning bullish. The number of bullish hedge fund bets inched up by 6 recently. ACET was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 5 hedge funds in our database with ACET 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 Hanmi Financial Corp (NASDAQ:HAFC), LHC Group, Inc. (NASDAQ:LHCG), and WSFS Financial Corporation (NASDAQ:WSFS) to gather more data points.
Follow Aceto Corp (NASDAQ:ACETQ)
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In today’s marketplace there are many tools investors have at their disposal to assess their stock investments. A couple of the most under-the-radar tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat the market by a solid amount (see the details here).
Keeping this in mind, let’s take a glance at the recent action encompassing Aceto Corporation (NASDAQ:ACET).
How are hedge funds trading Aceto Corporation (NASDAQ:ACET)?
At the Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 120% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Aceto Corporation (NASDAQ:ACET), worth close to $23.6 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund is Renaissance Technologies, with a $10.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. The remaining members of the smart money with similar optimism encompass Israel Englander’s Millennium Management, Ken Fisher’s Fisher Asset Management and Richard Driehaus’ Driehaus Capital.
As aggregate interest increased, key money managers have been driving this bullishness. Fisher Asset Management assembled the most valuable position in Aceto Corporation (NASDAQ:ACET). Fisher Asset Management had $4.2 million invested in the company at the end of the quarter. Driehaus Capital also initiated a $3.5 million position during the quarter. The following funds were also among the new ACET investors: Mike Vranos’ Ellington, John Overdeck and David Siegel’s Two Sigma Advisors, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks similar to Aceto Corporation (NASDAQ:ACET). These stocks are Hanmi Financial Corp (NASDAQ:HAFC), LHC Group, Inc. (NASDAQ:LHCG), WSFS Financial Corporation (NASDAQ:WSFS), and Amplify Snack Brands Inc (NYSE:BETR). All of these stocks’ market caps are closest to ACET’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HAFC | 13 | 72344 | 3 |
| LHCG | 20 | 107498 | 3 |
| WSFS | 9 | 51895 | -1 |
| BETR | 13 | 78005 | 13 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $77 million, which is lower than the $48 million figure in ACET’s case. LHC Group, Inc. (NASDAQ:LHCG) is the most popular stock in this table. On the other hand WSFS Financial Corporation (NASDAQ:WSFS) is the least popular one with only 9 bullish hedge fund positions. Aceto Corporation (NASDAQ:ACET) 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. In this regard LHCG might be a better candidate to consider a long position.
