Is Atotech Limited (ATC) A Good Stock To Buy?

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 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 Atotech Limited (NYSE:ATC) in this article.

Is ATC a good stock to buy? Hedge funds were betting on the stock. The number of bullish hedge fund positions went up by 17 in recent months. Atotech Limited (NYSE:ATC) was in 17 hedge funds’ portfolios at the end of March. Our calculations also showed that ATC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the 21st century investor’s toolkit there are tons of metrics market participants have at their disposal to value their stock investments. A pair of the most innovative metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the market by a superb margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind let’s take a look at the new hedge fund action surrounding Atotech Limited (NYSE:ATC).

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

Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ATC over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Millennium Management held the most valuable stake in Atotech Limited (NYSE:ATC), which was worth $10.4 million at the end of the fourth quarter. On the second spot was Marshall Wace LLP which amassed $9.6 million worth of shares. Royce & Associates, Citadel Investment Group, and Alkeon Capital 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 Appian Way Asset Management allocated the biggest weight to Atotech Limited (NYSE:ATC), around 1.48% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to ATC.

As industrywide interest jumped, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, established the largest position in Atotech Limited (NYSE:ATC). Millennium Management had $10.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $9.6 million position during the quarter. The other funds with brand new ATC positions are Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group, and Panayotis Takis Sparaggis’s Alkeon Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Atotech Limited (NYSE:ATC) but similarly valued. These stocks are Goosehead Insurance, Inc. (NASDAQ:GSHD), The Brink’s Company (NYSE:BCO), Southwest Gas Holdings, Inc. (NYSE:SWX), Colliers International Group Inc (NASDAQ:CIGI), AllianceBernstein Holding LP (NYSE:AB), Rapid7 Inc (NASDAQ:RPD), and Switch, Inc. (NYSE:SWCH). All of these stocks’ market caps are similar to ATC’s market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSHD,24,162339,3 BCO,24,406832,-2 SWX,23,159735,6 CIGI,14,866464,3 AB,8,40384,-1 RPD,25,151718,4 SWCH,10,187483,-8 Average,18.3,282136,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $70 million in ATC’s case. Rapid7 Inc (NASDAQ:RPD) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 8 bullish hedge fund positions. Atotech Limited (NYSE:ATC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ATC is 52.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on ATC, though not to the same extent, as the stock returned 22.4% since the end of Q1 (through July 23rd) and outperformed the market.

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