Is It Time to Consider Apogee Enterprises Inc (APOG) Again?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Is Apogee Enterprises Inc (NASDAQ:APOG) the right pick for your portfolio? The best stock pickers are getting more optimistic. The number of bullish hedge fund investments increased by 1 lately. APOG was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with APOG holdings at the end of the previous quarter. At the end of this article we will also compare APOG to other stocks including Rambus Inc. (NASDAQ:RMBS), Adecoagro SA (NYSE:AGRO), and Stepan Company (NYSE:SCL) 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.

How have hedgies been trading Apogee Enterprises Inc (NASDAQ:APOG)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 8% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards APOG over the last 5 quarters, which shows a consistent downtrend until the latest quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the most valuable position in Apogee Enterprises Inc (NASDAQ:APOG). Royce & Associates has a $44.8 million position in the stock. On Royce & Associates’ heels is Israel Englander’s Millennium Management, with a $7.7 million position. Other professional money managers that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds 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.

With general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Skylands Capital, led by Charles Paquelet, established the largest position in Apogee Enterprises Inc (NASDAQ:APOG). Skylands Capital had $1.3 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Apogee Enterprises Inc (NASDAQ:APOG) but similarly valued. We will take a look at Rambus Inc. (NASDAQ:RMBS), Adecoagro SA (NYSE:AGRO), Stepan Company (NYSE:SCL), and Headwaters Inc (NYSE:HW). This group of stocks’ market valuations are similar to APOG’s market valuation.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $72 million in APOG’s case. Headwaters Inc (NYSE:HW) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 11 bullish hedge fund positions. Apogee Enterprises Inc (NASDAQ:APOG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HW might be a better candidate to consider taking a long position in.

Disclosure: None