At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Acuity Brands, Inc. (NYSE:AYI) makes for a good investment right now.
Acuity Brands, Inc. (NYSE:AYI) has seen an increase in the hedge fund interest of late. At the end of this article, we will also compare Acuity Brands, Inc. (NYSE:AYI) to other stocks, including E*TRADE Financial Corporation (NASDAQ:ETFC), Oneok Partners LP (NYSE:OKS), and Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC) to get a better sense of its popularity.
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If you’d ask most market participants, hedge funds are perceived as worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading at the moment, we hone in on the leaders of this club, approximately 700 funds. These hedge fund managers manage the bulk of all hedge funds’ total asset base, and by monitoring their matchless investments, Insider Monkey has deciphered a few investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to review the recent action surrounding Acuity Brands, Inc. (NYSE:AYI).
What does the smart money think about Acuity Brands, Inc. (NYSE:AYI)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 22% from the second quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Heebner’s Capital Growth Management has the largest position in Acuity Brands, Inc. (NYSE:AYI), worth close to $55.3 million, amounting to 1.8% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $44.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’ AQR Capital Management, and Peter Muller’s PDT Partners.
Now, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, created the biggest position in Acuity Brands, Inc. (NYSE:AYI). Millennium Management had $14.3 million invested in the company at the end of the quarter. George Hall’s Clinton Group also initiated a $5.6 million position during the quarter. The following funds were also among the new AYI investors: D E Shaw, Dmitry Balyasny’s Balyasny Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Acuity Brands, Inc. (NYSE:AYI). We will take a look at E*TRADE Financial Corporation (NASDAQ:ETFC), Oneok Partners LP (NYSE:OKS), Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC), and Oaktree Capital Group LLC (NYSE:OAK). This group of stocks’ market caps is similar to Acuity Brands, Inc. (NYSE:AYI)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETFC | 54 | 1048375 | 3 |
| OKS | 8 | 35260 | -1 |
| TKC | 7 | 27743 | 0 |
| OAK | 13 | 119918 | 0 |
As you can see, these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $292 million in Acuity Brands, Inc. (NYSE:AYI)’s case. E*TRADE Financial Corporation (NASDAQ:ETFC) is the most popular stock in this table. On the other hand, Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC) is the least popular one with only 7 bullish hedge fund positions. Acuity Brands, Inc. (NYSE:AYI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, E*TRADE Financial Corporation (NASDAQ:ETFC) might be a better candidate to consider a long position.
