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This Metric Says You Are Smart to Sell Acuity Brands, Inc. (AYI): LG Display Co Ltd. (ADR) (LPL), Sanmina Corp (SANM)

Acuity Brands, Inc. (NYSE:AYI) has seen a decrease in support from the world’s most elite money managers lately.

Acuity Brands, Inc. (NYSE:AYI)At the moment, there are tons of methods investors can use to watch stocks. Some of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can outperform their index-focused peers by a solid amount (see just how much).

Just as beneficial, optimistic insider trading sentiment is a second way to parse down the world of equities. Just as you’d expect, there are a variety of motivations for an upper level exec to drop shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know what to do (learn more here).

Keeping this in mind, we’re going to take a look at the latest action encompassing Acuity Brands, Inc. (NYSE:AYI).

What does the smart money think about Acuity Brands, Inc. (NYSE:AYI)?

At year’s end, a total of 16 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, SAC Capital Advisors, managed by Steven Cohen, holds the biggest position in Acuity Brands, Inc. (NYSE:AYI). SAC Capital Advisors has a $40 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $28 million position; 0% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Donald Chiboucis’s Columbus Circle Investors, Chuck Royce’s Royce & Associates and Andrew Sandler’s Sandler Capital Management.

Judging by the fact that Acuity Brands, Inc. (NYSE:AYI) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that slashed their entire stakes heading into 2013. Interestingly, D. E. Shaw’s D E Shaw dropped the largest position of the 450+ funds we monitor, worth close to $1 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Acuity Brands, Inc. (NYSE:AYI)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last half-year time frame, Acuity Brands, Inc. (NYSE:AYI) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Acuity Brands, Inc. (NYSE:AYI). These stocks are LG Display Co Ltd. (ADR) (NYSE:LPL), Sanmina Corp (NASDAQ:SANM), Molex Incorporated (NASDAQ:MOLX), AVX Corporation (NYSE:AVX), and Dolby Laboratories, Inc. (NYSE:DLB). This group of stocks are in the diversified electronics industry and their market caps are similar to AYI’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
LG Display Co Ltd. (ADR) (NYSE:LPL) 9 0 0
Sanmina Corp (NASDAQ:SANM) 18 0 1
Molex Incorporated (NASDAQ:MOLX) 16 0 0
AVX Corporation (NYSE:AVX) 16 0 1
Dolby Laboratories, Inc. (NYSE:DLB) 13 0 7

With the returns shown by the aforementioned time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Acuity Brands, Inc. (NYSE:AYI) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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