Did Hedge Funds Drop The Ball On Atkore International Group Inc. (ATKR) ?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Atkore International Group Inc. (NYSE:ATKR).

Is Atkore International Group Inc. (NYSE:ATKR) a buy, sell, or hold? The smart money is turning bullish. The number of bullish hedge fund bets rose by 2 in recent months. Our calculations also showed that ATKR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Curtis Schenker of Scoggin

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action surrounding Atkore International Group Inc. (NYSE:ATKR).

Hedge fund activity in Atkore International Group Inc. (NYSE:ATKR)

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in ATKR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Atkore International Group Inc. (NYSE:ATKR). AQR Capital Management has a $26.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On AQR Capital Management’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $17.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass Noam Gottesman’s GLG Partners, Renaissance Technologies and David E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Corsair Capital Management allocated the biggest weight to Atkore International Group Inc. (NYSE:ATKR), around 1.55% of its 13F portfolio. Scoggin is also relatively very bullish on the stock, designating 0.22 percent of its 13F equity portfolio to ATKR.

As aggregate interest increased, specific money managers were breaking ground themselves. Scoggin, managed by Curtis Schenker and Craig Effron, assembled the largest position in Atkore International Group Inc. (NYSE:ATKR). Scoggin had $0.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $0.5 million investment in the stock during the quarter. The other funds with brand new ATKR positions are Ronald Hua’s Qtron Investments, Joel Greenblatt’s Gotham Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks similar to Atkore International Group Inc. (NYSE:ATKR). We will take a look at The RMR Group Inc. (NASDAQ:RMR), The Liberty Braves Group (NASDAQ:BATRK), Linx S.A. (NYSE:LINX), and State Auto Financial Corporation (NASDAQ:STFC). This group of stocks’ market caps resemble ATKR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RMR 20 186711 -2
BATRK 22 318173 -1
LINX 5 35694 -9
STFC 7 16867 0
Average 13.5 139361 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $104 million in ATKR’s case. The Liberty Braves Group (NASDAQ:BATRK) is the most popular stock in this table. On the other hand Linx S.A. (NYSE:LINX) is the least popular one with only 5 bullish hedge fund positions. Atkore International Group Inc. (NYSE:ATKR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ATKR as the stock returned 37.5% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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