In this article we will analyze whether Atotech Limited (NYSE:ATC) 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.
Atotech Limited (NYSE:ATC) has seen an increase in hedge fund interest recently. Atotech Limited (NYSE:ATC) was in 23 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 17 hedge funds in our database with ATC positions at the end of the first quarter. Our calculations also showed that ATC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jonathan Barrett of Luminus 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. With all of this in mind let’s review the fresh hedge fund action encompassing Atotech Limited (NYSE:ATC).
Do Hedge Funds Think ATC Is A Good Stock To Buy Now?
At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATC over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Atotech Limited (NYSE:ATC), with a stake worth $11 million reported as of the end of June. Trailing Royce & Associates was Scopus Asset Management, which amassed a stake valued at $8.3 million. Luminus Management, Driehaus Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Appian Way Asset Management allocated the biggest weight to Atotech Limited (NYSE:ATC), around 1.89% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, designating 1.04 percent of its 13F equity portfolio to ATC.
Consequently, specific money managers were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, established the largest position in Atotech Limited (NYSE:ATC). Scopus Asset Management had $8.3 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal’s Luminus Management also initiated a $7.2 million position during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Renaissance Technologies, and Noam Gottesman’s GLG Partners.
Let’s go over hedge fund activity in other stocks similar to Atotech Limited (NYSE:ATC). These stocks are VIZIO Holding Corp. (NYSE:VZIO), Antero Midstream Corp (NYSE:AM), Neogen Corporation (NASDAQ:NEOG), New Residential Investment Corp (NYSE:NRZ), IDACORP Inc (NYSE:IDA), Colliers International Group Inc (NASDAQ:CIGI), and Watts Water Technologies Inc (NYSE:WTS). This group of stocks’ market caps resemble ATC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VZIO | 19 | 128239 | 0 |
| AM | 16 | 106977 | -1 |
| NEOG | 12 | 37911 | 2 |
| NRZ | 20 | 129871 | 5 |
| IDA | 15 | 77067 | -2 |
| CIGI | 17 | 825694 | 3 |
| WTS | 18 | 471866 | 0 |
| Average | 16.7 | 253946 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $254 million. That figure was $83 million in ATC’s case. New Residential Investment Corp (NYSE:NRZ) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Atotech Limited (NYSE:ATC) is more popular among hedge funds. Our overall hedge fund sentiment score for ATC is 90. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately ATC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ATC were disappointed as the stock returned -6.2% since the end of the second quarter (through 10/22) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
