Did Hedge Funds Make The Right Call On Acuity Brands, Inc. (AYI) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAcuity Brands, Inc. (NYSE:AYI) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Acuity Brands, Inc. (NYSE:AYI) going to take off soon? The smart money was in an optimistic mood. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that AYI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AYI was in 31 hedge funds’ portfolios at the end of March. There were 29 hedge funds in our database with AYI holdings at the end of the previous quarter.

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

Today there are a multitude of metrics market participants have at their disposal to analyze their stock investments. A duo of the most useful metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outclass their index-focused peers by a significant amount (see the details here).


Lee Ainslie of Maverick Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. With all of this in mind let’s check out the key hedge fund action regarding Acuity Brands, Inc. (NYSE:AYI).

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

At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in AYI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AYI A Good Stock To Buy?

The largest stake in Acuity Brands, Inc. (NYSE:AYI) was held by Generation Investment Management, which reported holding $164.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $84.1 million position. Other investors bullish on the company included AQR Capital Management, International Value Advisers, and Paradice Investment Management. In terms of the portfolio weights assigned to each position Paradice Investment Management allocated the biggest weight to Acuity Brands, Inc. (NYSE:AYI), around 5.41% of its 13F portfolio. International Value Advisers is also relatively very bullish on the stock, setting aside 3.58 percent of its 13F equity portfolio to AYI.

Consequently, specific money managers were breaking ground themselves. Paradice Investment Management, managed by David Paradice, initiated the most valuable position in Acuity Brands, Inc. (NYSE:AYI). Paradice Investment Management had $48.8 million invested in the company at the end of the quarter. Clint Murray’s Lodge Hill Capital also initiated a $6.6 million position during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Lee Ainslie’s Maverick Capital, and Alexander Roepers’s Atlantic Investment Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Acuity Brands, Inc. (NYSE:AYI) but similarly valued. We will take a look at Companhia Brasileira de Distrib. (NYSE:CBD), Qualys Inc (NASDAQ:QLYS), SL Green Realty Corp (NYSE:SLG), and CAE, Inc. (NYSE:CAE). This group of stocks’ market values match AYI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBD 5 7159 -4
QLYS 17 115965 -12
SLG 23 192086 -4
CAE 20 79383 10
Average 16.25 98648 -2.5

View table here if you experience formatting issues.

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 $99 million. That figure was $499 million in AYI’s case. SL Green Realty Corp (NYSE:SLG) is the most popular stock in this table. On the other hand Companhia Brasileira de Distrib. (NYSE:CBD) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Acuity Brands, Inc. (NYSE:AYI) is more popular among hedge funds. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately AYI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AYI were disappointed as the stock returned 11.9% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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