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Should You Buy Astec Industries, Inc. (ASTE)?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Astec Industries, Inc. (NASDAQ:ASTE).

Is Astec Industries, Inc. (NASDAQ:ASTE) a worthy investment now? Money managers are in a bullish mood. The number of long hedge fund positions rose by 3 recently. Our calculations also showed that ASTE isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RichardMcGuire_MarcatoCapitalManagement

Let’s take a look at the latest hedge fund action encompassing Astec Industries, Inc. (NASDAQ:ASTE).

What have hedge funds been doing with Astec Industries, Inc. (NASDAQ:ASTE)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards ASTE over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

ASTE_dec2018

Among these funds, GAMCO Investors held the most valuable stake in Astec Industries, Inc. (NASDAQ:ASTE), which was worth $62 million at the end of the third quarter. On the second spot was Marcato Capital Management which amassed $26.5 million worth of shares. Moreover, Royce & Associates, Citadel Investment Group, and AQR Capital Management were also bullish on Astec Industries, Inc. (NASDAQ:ASTE), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Astec Industries, Inc. (NASDAQ:ASTE) headfirst. Engaged Capital, managed by Glenn W. Welling, created the largest position in Astec Industries, Inc. (NASDAQ:ASTE). Engaged Capital had $3.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital, D. E. Shaw’s D E Shaw, and Joel Greenblatt’s Gotham Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Astec Industries, Inc. (NASDAQ:ASTE) but similarly valued. We will take a look at CorePoint Lodging Inc. (NYSE:CPLG), Hannon Armstrong Sustnbl Infrstr Cap Inc (NYSE:HASI), InVitae Corporation (NYSE:NVTA), and Knoll Inc (NYSE:KNL). This group of stocks’ market caps are similar to ASTE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CPLG 23 239001 3
HASI 6 16321 0
NVTA 20 318967 7
KNL 14 42034 1
Average 15.75 154081 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $127 million in ASTE’s case. CorePoint Lodging Inc. (NYSE:CPLG) is the most popular stock in this table. On the other hand Hannon Armstrong Sustnbl Infrstr Cap Inc (NYSE:HASI) is the least popular one with only 6 bullish hedge fund positions. Astec Industries, Inc. (NASDAQ:ASTE) 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 CPLG might be a better candidate to consider a long position.

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

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