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Altra Industrial Motion Corp. (AIMC): Hedge Funds In Wait-and-See Mode

In this article we will take a look at whether hedge funds think Altra Industrial Motion Corp. (NASDAQ:AIMC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Altra Industrial Motion Corp. (NASDAQ:AIMC) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare AIMC to other stocks including Sykes Enterprises, Incorporated (NASDAQ:SYKE), Inogen Inc (NASDAQ:INGN), and DHT Holdings Inc (NYSE:DHT) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are perceived as underperforming, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, Our researchers choose to focus on the top tier of this group, about 850 funds. These money managers manage most of the smart money’s total asset base, and by watching their best picks, Insider Monkey has uncovered various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the recent hedge fund action encompassing Altra Industrial Motion Corp. (NASDAQ:AIMC).

How are hedge funds trading Altra Industrial Motion Corp. (NASDAQ:AIMC)?

At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in AIMC a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Is AIMC A Good Stock To Buy?

More specifically, Gates Capital Management was the largest shareholder of Altra Industrial Motion Corp. (NASDAQ:AIMC), with a stake worth $47 million reported as of the end of September. Trailing Gates Capital Management was Renaissance Technologies, which amassed a stake valued at $9.7 million. Arrowstreet Capital, Marshall Wace LLP, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Gates Capital Management allocated the biggest weight to Altra Industrial Motion Corp. (NASDAQ:AIMC), around 3.1% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, setting aside 0.35 percent of its 13F equity portfolio to AIMC.

Judging by the fact that Altra Industrial Motion Corp. (NASDAQ:AIMC) has experienced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few hedgies that elected to cut their positions entirely in the first quarter. Intriguingly, Richard S. Meisenberg’s ACK Asset Management cut the biggest investment of all the hedgies monitored by Insider Monkey, worth an estimated $15.4 million in stock, and Robert Vincent McHugh’s Jade Capital Advisors was right behind this move, as the fund dropped about $2.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Altra Industrial Motion Corp. (NASDAQ:AIMC). We will take a look at Sykes Enterprises, Incorporated (NASDAQ:SYKE), Inogen Inc (NASDAQ:INGN), DHT Holdings Inc (NYSE:DHT), and Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT). This group of stocks’ market valuations are closest to AIMC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SYKE 14 56085 -4
INGN 12 60103 -9
DHT 34 263246 0
ARQT 8 553112 8
Average 17 233137 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $233 million. That figure was $81 million in AIMC’s case. DHT Holdings Inc (NYSE:DHT) is the most popular stock in this table. On the other hand Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) is the least popular one with only 8 bullish hedge fund positions. Altra Industrial Motion Corp. (NASDAQ:AIMC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on AIMC as the stock returned 72.5% during the second quarter and outperformed the market by an even larger margin.

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