Is AdvanSix Inc. (NYSE:ASIX) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in AdvanSix Inc. (NYSE:ASIX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare ASIX to other stocks including Coeur Mining, Inc. (NYSE:CDE), Connecticut Water Service, Inc. (NASDAQ:CTWS), and Newpark Resources Inc (NYSE:NR) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to check out the recent hedge fund action encompassing AdvanSix Inc. (NYSE:ASIX).
Hedge fund activity in AdvanSix Inc. (NYSE:ASIX)
Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ASIX over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Firefly Value Partners was the largest shareholder of AdvanSix Inc. (NYSE:ASIX), with a stake worth $68.7 million reported as of the end of March. Trailing Firefly Value Partners was D E Shaw, which amassed a stake valued at $24.1 million. Renaissance Technologies, Arrowstreet Capital, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as AdvanSix Inc. (NYSE:ASIX) has witnessed a decline in interest from the smart money, it's safe to say that there exists a select few hedge funds who sold off their positions entirely in the third quarter. At the top of the heap, Ken Griffin's Citadel Investment Group cut the largest investment of all the hedgies watched by Insider Monkey, totaling about $1 million in stock. Peter Algert and Kevin Coldiron's fund, Algert Coldiron Investors, also dumped its stock, about $0.5 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to AdvanSix Inc. (NYSE:ASIX). We will take a look at Coeur Mining, Inc. (NYSE:CDE), Connecticut Water Service, Inc. (NASDAQ:CTWS), Newpark Resources Inc (NYSE:NR), and Goldman Sachs BDC, Inc. (NYSE:GSBD). This group of stocks' market caps are closest to ASIX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDE,11,25132,-2 CTWS,4,22160,-1 NR,15,42423,5 GSBD,1,3812,-3 Average,7.75,23382,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $147 million in ASIX's case. Newpark Resources Inc (NYSE:NR) is the most popular stock in this table. On the other hand Goldman Sachs BDC, Inc. (NYSE:GSBD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks AdvanSix Inc. (NYSE:ASIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ASIX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ASIX were disappointed as the stock returned -11.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.