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In this article we will take a look at whether hedge funds think AdvanSix Inc. (NYSE:ASIX) is 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, unconventional data sources, 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.
Is ASIX a good stock to buy now? AdvanSix Inc. (NYSE:ASIX) was in 14 hedge funds' portfolios at the end of September. The all time high for this statistic is 23. ASIX has seen a decrease in hedge fund sentiment lately. There were 16 hedge funds in our database with ASIX holdings at the end of June. Our calculations also showed that ASIX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a multitude of gauges shareholders can use to grade publicly traded companies. Two of the most underrated gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace their index-focused peers by a superb margin (see the details here).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to review the latest hedge fund action surrounding AdvanSix Inc. (NYSE:ASIX).
Do Hedge Funds Think ASIX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in ASIX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in AdvanSix Inc. (NYSE:ASIX) was held by Ancient Art (Teton Capital), which reported holding $9.3 million worth of stock at the end of September. It was followed by D E Shaw with a $8 million position. Other investors bullish on the company included Southpoint Capital Advisors, Firefly Value Partners, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Firefly Value Partners allocated the biggest weight to AdvanSix Inc. (NYSE:ASIX), around 9.56% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, setting aside 1.79 percent of its 13F equity portfolio to ASIX.
Since AdvanSix Inc. (NYSE:ASIX) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Greg Eisner's Engineers Gate Manager dropped the biggest stake of the 750 funds watched by Insider Monkey, worth about $0.6 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund cut about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as AdvanSix Inc. (NYSE:ASIX) but similarly valued. We will take a look at Urstadt Biddle Properties Inc (NYSE:UBA), Sutro Biopharma, Inc. (NASDAQ:STRO), Insteel Industries Inc (NASDAQ:IIIN), Akebia Therapeutics Inc (NASDAQ:AKBA), NextDecade Corporation (NASDAQ:NEXT), Crescent Capital BDC, Inc. (NASDAQ:CCAP), and PDL BioPharma Inc. (NASDAQ:PDLI). This group of stocks' market valuations are similar to ASIX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBA,18,28677,3 STRO,23,172590,3 IIIN,9,22380,1 AKBA,18,59298,-7 NEXT,5,261490,-2 CCAP,6,51922,2 PDLI,15,107581,-1 Average,13.4,100563,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $42 million in ASIX's case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand NextDecade Corporation (NASDAQ:NEXT) is the least popular one with only 5 bullish hedge fund positions. AdvanSix Inc. (NYSE:ASIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASIX is 46.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ASIX as the stock returned 57.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.