Is Astec Industries, Inc. (ASTE) A Good Stock To Buy?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Astec Industries, Inc. (NASDAQ:ASTE).

Astec Industries, Inc. investors should be aware of a decrease in hedge fund sentiment of late. ASTE was in 12 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with ASTE holdings at the end of the previous quarter. At the end of this article we will also compare ASTE to other stocks including DHX Media Ltd (USA) (NASDAQ:DHXM), Relypsa Inc (NASDAQ:RLYP), and Inter Parfums, Inc. (NASDAQ:IPAR) to get a better sense of its popularity.

In the eyes of most market participants, hedge funds are viewed as worthless, old financial vehicles of years past. While there are greater than 8000 funds trading today, We hone in on the bigwigs of this group, about 700 funds. These money managers command the lion’s share of all hedge funds’ total capital, and by tracking their first-class investments, Insider Monkey has uncovered various investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to review the fresh action regarding Astec Industries, Inc. (NASDAQ:ASTE).

Hedge fund activity in Astec Industries, Inc. (NASDAQ:ASTE)

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the number one position in Astec Industries, Inc. (NASDAQ:ASTE). GAMCO Investors has a $41.7 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $21.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass Steve Cohen’s Point72 Asset Management, Israel Englander’s Millennium Management and Jim Simons’s Renaissance Technologies.

Seeing as Astec Industries, Inc. (NASDAQ:ASTE) has experienced falling interest from hedge fund managers, logic holds that there exists a select few hedgies who sold off their entire stakes by the end of the third quarter. At the top of the heap, Michael Platt and William Reeves’s BlueCrest Capital Mgmt. dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth close to $0.6 million in stock. Cliff Asness’s fund, AQR Capital Management, also said goodbye to its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.

On the next page, we analyze hedge fund activity of similarly priced stocks to get a better feel on what the elite funds think of ASTE.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Astec Industries, Inc. (NASDAQ:ASTE) but similarly valued. These stocks are DHX Media Ltd (USA) (NASDAQ:DHXM), Relypsa Inc (NASDAQ:RLYP), Inter Parfums, Inc. (NASDAQ:IPAR), and K2M Group Holdings Inc (NASDAQ:KTWO). This group of stocks’ market caps are closest to ASTE’s market cap.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $86 million in ASTE’s case. Relypsa Inc (NASDAQ:RLYP) is the most popular stock in this table. On the other hand DHX Media Ltd (USA) (NASDAQ:DHXM) is the least popular one with only 5 bullish hedge fund positions. Astec Industries, Inc. (NASDAQ:ASTE) 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 RLYP might be a better candidate to consider a long position.