Hedge Funds Are Coming Back To Acuity Brands, Inc. (AYI)

In this article we will analyze whether Acuity Brands, Inc. (NYSE:AYI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Acuity Brands, Inc. (NYSE:AYI) a first-rate investment today? Investors who are in the know were betting on the stock. The number of long hedge fund positions went up by 2 recently. Acuity Brands, Inc. (NYSE:AYI) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that AYI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 29 hedge funds in our database with AYI holdings at the end of December.

At the moment there are several formulas stock traders can use to grade publicly traded companies. A couple of the less utilized formulas are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top investment managers can outperform the market by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

David Blood

David Blood of Generation Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a gander at the fresh hedge fund action regarding Acuity Brands, Inc. (NYSE:AYI).

Do Hedge Funds Think AYI Is A Good Stock To Buy Now?

At the end of March, 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. The graph below displays the number of hedge funds with bullish position in AYI over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Acuity Brands, Inc. (NYSE:AYI) was held by Generation Investment Management, which reported holding $509 million worth of stock at the end of December. It was followed by Miller Value Partners with a $102.4 million position. Other investors bullish on the company included Paradice Investment Management, AQR Capital Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Paradice Investment Management allocated the biggest weight to Acuity Brands, Inc. (NYSE:AYI), around 4.37% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, earmarking 2.65 percent of its 13F equity portfolio to AYI.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Interval Partners, managed by Gregg Moskowitz, created the biggest position in Acuity Brands, Inc. (NYSE:AYI). Interval Partners had $30.9 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $12.4 million position during the quarter. The following funds were also among the new AYI investors: Anand Parekh’s Alyeska Investment Group, Dmitry Balyasny’s Balyasny Asset Management, and Ira Unschuld’s Brant Point Investment Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Acuity Brands, Inc. (NYSE:AYI) but similarly valued. These stocks are Popular Inc (NASDAQ:BPOP), SYNNEX Corporation (NYSE:SNX), Sarepta Therapeutics Inc (NASDAQ:SRPT), Duck Creek Technologies, Inc. (NASDAQ:DCT), First Industrial Realty Trust, Inc. (NYSE:FR), Louisiana-Pacific Corporation (NYSE:LPX), and Colfax Corporation (NYSE:CFX). This group of stocks’ market values are similar to AYI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BPOP 34 873784 -1
SNX 15 614677 -9
SRPT 33 526911 -4
DCT 19 310721 -3
FR 20 416925 -6
LPX 30 771996 -11
CFX 49 1009256 13
Average 28.6 646324 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $646 million. That figure was $969 million in AYI’s case. Colfax Corporation (NYSE:CFX) is the most popular stock in this table. On the other hand SYNNEX Corporation (NYSE:SNX) is the least popular one with only 15 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. Our overall hedge fund sentiment score for AYI is 55. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately AYI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AYI were disappointed as the stock returned 8.4% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Follow Acuity Brands Inc (NYSE:AYI)

Suggested Articles:

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