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Is Associated Banc Corp (ASB) Going to Burn These Hedge Funds?

Reymerlyn Martin

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Is Associated Banc Corp (NYSE:ASB) a buy right now? The best stock pickers are in a bullish mood. The number of long hedge fund positions moved up by 4 lately. Our calculations also showed that ASB isn't among the 30 most popular stocks among hedge funds. ASB was in 17 hedge funds' portfolios at the end of September. There were 13 hedge funds in our database with ASB positions at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

George Soros, Soros Fund Management

Let's take a glance at the new hedge fund action surrounding Associated Banc Corp (NYSE:ASB).

How are hedge funds trading Associated Banc Corp (NYSE:ASB)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ASB over the last 13 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

ASB_dec2018

The largest stake in Associated Banc Corp (NYSE:ASB) was held by Millennium Management, which reported holding $104.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $93.4 million position. Other investors bullish on the company included Pzena Investment Management, Royce & Associates, and Soros Fund Management.

As one would reasonably expect, specific money managers have jumped into Associated Banc Corp (NYSE:ASB) headfirst. Renaissance Technologies, managed by Jim Simons, created the most valuable position in Associated Banc Corp (NYSE:ASB). Renaissance Technologies had $1 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $0.9 million position during the quarter. The following funds were also among the new ASB investors: Noam Gottesman's GLG Partners, Roger Ibbotson's Zebra Capital Management, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital.

Let's go over hedge fund activity in other stocks similar to Associated Banc Corp (NYSE:ASB). These stocks are Enstar Group Ltd. (NASDAQ:ESGR), Echostar Corporation (NASDAQ:SATS), Urban Outfitters, Inc. (NASDAQ:URBN), and BRF S.A. (NYSE:BRFS). All of these stocks' market caps are closest to ASB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESGR,10,673382,-1 SATS,28,443489,2 URBN,31,425814,4 BRFS,10,50558,0 Average,19.75,398311,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $398 million. That figure was $298 million in ASB's case. Urban Outfitters, Inc. (NASDAQ:URBN) is the most popular stock in this table. On the other hand Enstar Group Ltd. (NASDAQ:ESGR) is the least popular one with only 10 bullish hedge fund positions. Associated Banc Corp (NYSE:ASB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. In this regard URBN might be a better candidate to consider a long position.

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

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