Why Acuity Brands (AYI) Stock is a Compelling Investment Case

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Miller Value Partners recently released its Q3 2020 Investor Letter, a copy of which you can download here. The Opportunity Equity Fund posted a return of 13.01% for the quarter (net of fees), outperforming its benchmark, the S&P 500 Index which returned 8.93% in the same quarter. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Miller Value Partners highlighted a few stocks and Acuity Brands Inc (NYSE:AYI) is one of them. Acuity Brands Inc (NYSE:AYI) is a lighting and building management firm. Year-to-date, Acuity Brands Inc (NYSE:AYI) stock lost 32.9% and on November 2nd it had a closing price of $92.57. Here is what Miller Value Partners said:

“Acuity Brands is a leader in the lighting space. It has historically generated attractive returns on capital. We grew interested when the new CEO Neil Ashe, who we knew from his prior days at CNet and Wal-Mart.com, arrived. The company generates significant free cash flow with sustainable levels of roughly $400M per year (10% yield). While end markets are currently under pressure, Ashe’s vision is to drive a digital transformation in the business. There’s improvement potential from end market recovery along with internal business improvement. We think the stock is worth significantly more than where it’s trading.”

In Q2 2020, the number of bullish hedge fund positions on Acuity Brands Inc (NYSE:AYI) stock increased by about 23% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Acuity Brands’s growth potential. Our calculations showed that Acuity Brands Inc (NYSE:AYI) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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