Is AZEK A Good Stock To Buy According To Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about The AZEK Company Inc. (NYSE:AZEK) in this article.

Is AZEK a good stock to buy? Prominent investors were betting on the stock. The number of long hedge fund positions moved up by 8 in recent months. The AZEK Company Inc. (NYSE:AZEK) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AZEK 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). There were 26 hedge funds in our database with AZEK positions at the end of the second quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are perceived as slow, outdated financial tools of years past. While there are greater than 8000 funds trading today, Our researchers look at the crème de la crème of this group, approximately 850 funds. These money managers administer most of all hedge funds’ total capital, and by keeping an eye on their unrivaled investments, Insider Monkey has identified a number of investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 glance at the fresh hedge fund action encompassing The AZEK Company Inc. (NYSE:AZEK).

Do Hedge Funds Think AZEK Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AZEK over the last 21 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Is AZEK A Good Stock To Buy?

Among these funds, Zimmer Partners held the most valuable stake in The AZEK Company Inc. (NYSE:AZEK), which was worth $114.7 million at the end of the third quarter. On the second spot was Alyeska Investment Group which amassed $92.3 million worth of shares. Millennium Management, Citadel Investment Group, and Balyasny Asset Management 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 Jade Capital Advisors allocated the biggest weight to The AZEK Company Inc. (NYSE:AZEK), around 3.16% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, earmarking 2.95 percent of its 13F equity portfolio to AZEK.

Consequently, key hedge funds have jumped into The AZEK Company Inc. (NYSE:AZEK) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in The AZEK Company Inc. (NYSE:AZEK). Balyasny Asset Management had $20.2 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital also initiated a $7.4 million position during the quarter. The other funds with brand new AZEK positions are Joseph Samuels’s Islet Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Elise Di Vincenzo Crumbine’s Stormborn Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The AZEK Company Inc. (NYSE:AZEK) but similarly valued. We will take a look at Corelogic Inc (NYSE:CLGX), BWX Technologies Inc (NYSE:BWXT), Pearson PLC (NYSE:PSO), CACI International Inc (NYSE:CACI), Planet Fitness Inc (NYSE:PLNT), HUYA Inc. (NYSE:HUYA), and Comerica Incorporated (NYSE:CMA). This group of stocks’ market values are similar to AZEK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLGX 45 1712392 10
BWXT 21 166407 -6
PSO 5 16445 -2
CACI 31 575408 -3
PLNT 45 1552569 1
HUYA 22 390686 1
CMA 30 453794 -6
Average 28.4 695386 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $695 million. That figure was $489 million in AZEK’s case. Corelogic Inc (NYSE:CLGX) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 5 bullish hedge fund positions. The AZEK Company Inc. (NYSE:AZEK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AZEK is 76.3. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on AZEK, though not to the same extent, as the stock returned 11.1% since Q3 (through December 18th) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.