In this article you are going to find out whether hedge funds think Atlas Corp. (NYSE:ATCO) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is ATCO a good stock to buy now? Hedge funds were reducing their bets on the stock. The number of long hedge fund positions fell by 2 lately. Atlas Corp. (NYSE:ATCO) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 15. Our calculations also showed that ATCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s take a look at the latest hedge fund action regarding Atlas Corp. (NYSE:ATCO).
Do Hedge Funds Think ATCO Is A Good Stock To Buy Now?
At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ATCO over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Atlas Corp. (NYSE:ATCO) was held by Fairfax Financial Holdings, which reported holding $888.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $16.6 million position. Other investors bullish on the company included Miller Value Partners, Citadel Investment Group, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Fairfax Financial Holdings allocated the biggest weight to Atlas Corp. (NYSE:ATCO), around 50.15% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to ATCO.
Because Atlas Corp. (NYSE:ATCO) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few money managers that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Peter Muller’s PDT Partners cut the largest investment of the 750 funds tracked by Insider Monkey, totaling about $0.5 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund cut about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Atlas Corp. (NYSE:ATCO) but similarly valued. These stocks are VEON Ltd. (NASDAQ:VEON), F.N.B. Corp (NYSE:FNB), Central Garden & Pet Co (NASDAQ:CENT), 2U Inc (NASDAQ:TWOU), Worthington Industries, Inc. (NYSE:WOR), Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX), and Weingarten Realty Investors (NYSE:WRI). This group of stocks’ market caps are similar to ATCO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $220 million. That figure was $923 million in ATCO’s case. F.N.B. Corp (NYSE:FNB) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 8 bullish hedge fund positions. Atlas Corp. (NYSE:ATCO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ATCO is 28.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on ATCO as the stock returned 27.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.