Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Aceto Corporation (NASDAQ:ACET) from the perspective of those successful funds.
Is Aceto Corporation (NASDAQ:ACET) a marvelous investment now? The best stock pickers seem to be taking an optimistic view, as the number of long hedge fund investments went up by three during the third quarter, in this way, 11 funds in our database held shares of ACET at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as FTD Companies Inc (NASDAQ:FTD), Sodastream International Ltd (NASDAQ:SODA), and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) to gather more data points.
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.
Now, we’re going to take a glance at the latest action regarding Aceto Corporation (NASDAQ:ACET).
What does the smart money think about Aceto Corporation (NASDAQ:ACET)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, compared to eight funds at the end of June. The graph below displays the number of hedge funds with bullish position in ACET over the last five quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Aceto Corporation (NASDAQ:ACET). Royce & Associates has a $47.9 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, one of the 10 largest hedge funds in the world, led by Israel Englander, holding a $2.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish contain Ken Fisher’s Fisher Asset Management, Michael Castor’s Sio Capital, 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.
As one would reasonably expect, specific money managers have jumped into Aceto Corporation (NASDAQ:ACET) headfirst. Millennium Management assembled the biggest position in Aceto Corporation (NASDAQ:ACET). Michael Castor’s Sio Capital also initiated a $2.2 million position during the quarter. The following funds were also among the new ACET investors: John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management, and Neil Chriss’ Hutchin Hill Capital.
Let’s go over hedge fund activity in other stocks similar to Aceto Corporation (NASDAQ:ACET). We will take a look at FTD Companies Inc (NASDAQ:FTD), Sodastream International Ltd (NASDAQ:SODA), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), and AEP Industries (NASDAQ:AEPI). This group of stocks’ market values match ACET’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $60 million in ACET’s case. Sodastream International Ltd (NASDAQ:SODA) is the most popular stock in this table. On the other hand AEP Industries (NASDAQ:AEPI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Aceto Corporation (NASDAQ:ACET) is even less popular than AEPI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.