We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Advance Auto Parts, Inc. (NYSE:AAP).
Advance Auto Parts, Inc. (NYSE:AAP) has seen an increase in activity from the world’s largest hedge funds recently. At the end of this article we will also compare AAP to other stocks including KeyCorp (NYSE:KEY), Macy’s, Inc. (NYSE:M), and Waters Corporation (NYSE:WAT) to get a better sense of its popularity.
According to most shareholders, hedge funds are assumed to be unimportant, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, Our experts hone in on the aristocrats of this group, about 700 funds. These money managers direct the majority of the hedge fund industry’s total asset base, and by following their inimitable stock picks, Insider Monkey has revealed various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.
We are going to discuss the hedge fund sentiment towards Advance Auto Parts in more details later on in this article, but before we get to that, let’s assess the latest developments surrounding the company.
Advance Auto Parts’ stock has inched up by around 3% over the last 52 weeks. In December, the stock popped following reports that the company might be acquired and, according to Bloomberg, a potential buyer could’ve been O’Reilly Automotive. In September 2015, activist fund Starboard Value, led by Jeff Smith, disclosed a 3.7% in Advance Auto Parts and revealed a letter sent to the company’s CEO at the time Darren R. Jackson and the Board of Directors. On the next page, we are going to take a closer look at Starboard’s comments and take a closer look at the hedge fund sentiment that surrounds the stock.