Is Actuant Corporation (ATU) Worthy of Your Portfolio?

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we will analyze Actuant Corporation (NYSE:ATU) from the perspective of those successful funds.

Actuant Corporation (NYSE:ATU) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. During the third quarter, the number of hedge funds followed by Insider Monkey bullish on Actuand went up by seven to 16. At the end of this article we will also compare ATU to other stocks including The E.W. Scripps Company (NYSE:SSP), Apogee Enterprises, Inc. (NASDAQ:APOG), and Rambus Inc. (NASDAQ:RMBS) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with Actuant Corporation (NYSE:ATU)?

Heading into the fourth quarter of 2016, 16 funds tracked by Insider Monkey were bullish on Actuant Corporation, which represents a rise of 78% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATU over the last five quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mason Hawkins’ Southeastern Asset Management holds the biggest position in Actuant Corporation (NYSE:ATU). Southeastern Asset Management has a $149 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is Richard S. Pzena’s Pzena Investment Management, with a $68.5 million position. Remaining members of the smart money that hold long positions contain Mitch Cantor’s Mountain Lake Investment Management and Israel Englander’s Millennium Management. We should note that two of these hedge funds (Southeastern Asset Management and Mountain Lake Investment Management) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, some big names have jumped into Actuant Corporation (NYSE:ATU) headfirst. Mountain Lake Investment Management assembled the most valuable position in Actuant Corporation (NYSE:ATU), which was worth $6 million at the end of the third quarter. David E. Shaw’s D E Shaw also initiated a $5.1 million position during the quarter. The other funds with brand new ATU positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Platt and William Reeves’ BlueCrest Capital Mgmt., and Jim Simons’ Renaissance Technologies.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Actuant Corporation (NYSE:ATU) but similarly valued. These stocks are The E.W. Scripps Company (NYSE:SSP), Apogee Enterprises, Inc. (NASDAQ:APOG), Rambus Inc. (NASDAQ:RMBS), and Adecoagro SA (NYSE:AGRO). All of these stocks’ market caps are similar to ATU’s market cap.

As you can see these stocks had an average of 15 funds with bullish positions and the average amount invested in these stocks was $171 million, compared to $248 million in ATU’s case. Adecoagro SA (NYSE:AGRO) is the most popular stock in this table. On the other hand The E.W. Scripps Company (NYSE:SSP) is the least popular one with only 10 investors holding shares. Actuant Corporation (NYSE:ATU) 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 Adecoagro SA (NYSE:AGRO) might be a better candidate to consider taking a long position in.

Disclosure: None