Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Altra Industrial Motion Corp. (NASDAQ:AIMC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Altra Industrial Motion Corp. (NASDAQ:AIMC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of September. At the end of this article we will also compare AIMC to other stocks including SSR Mining Inc. (NASDAQ:SSRM), Sally Beauty Holdings, Inc. (NYSE:SBH), and Alexander’s, Inc. (NYSE:ALX) to get a better sense of its popularity.
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Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the new hedge fund action encompassing Altra Industrial Motion Corp. (NASDAQ:AIMC).
What have hedge funds been doing with Altra Industrial Motion Corp. (NASDAQ:AIMC)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 35 hedge funds with a bullish position in AIMC a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Gates’s Gates Capital Management has the most valuable position in Altra Industrial Motion Corp. (NASDAQ:AIMC), worth close to $158.4 million, comprising 6.9% of its total 13F portfolio. On Gates Capital Management’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $24.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions consist of David E. Shaw’s D E Shaw, Phill Gross and Robert Atchinson’s Adage Capital Management and Israel Englander’s Millennium Management. 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 6.87% of its 13F portfolio. Spitfire Capital is also relatively very bullish on the stock, setting aside 6.22 percent of its 13F equity portfolio to AIMC.
Judging by the fact that Altra Industrial Motion Corp. (NASDAQ:AIMC) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that slashed their full holdings in the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $7.9 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $5.4 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Altra Industrial Motion Corp. (NASDAQ:AIMC) but similarly valued. We will take a look at SSR Mining Inc. (NASDAQ:SSRM), Sally Beauty Holdings, Inc. (NYSE:SBH), Alexander’s, Inc. (NYSE:ALX), and NMI Holdings Inc (NASDAQ:NMIH). This group of stocks’ market valuations resemble AIMC’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $218 million in AIMC’s case. Sally Beauty Holdings, Inc. (NYSE:SBH) is the most popular stock in this table. On the other hand Alexander’s, Inc. (NYSE:ALX) is the least popular one with only 11 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 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. A small number of hedge funds were also right about betting on AIMC as the stock returned 18.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.