U.S. Markets closed

Did Hedge Funds Drop The Ball On Asbury Automotive Group, Inc. (ABG) ?

Reymerlyn Martin

The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors' filings. In this article, we analyze how these elite funds and prominent investors traded Asbury Automotive Group, Inc. (NYSE:ABG) based on those filings.

Asbury Automotive Group, Inc. (NYSE:ABG) investors should pay attention to a decrease in support from the world's most elite money managers of late. Our calculations also showed that ABG isn't among the 30 most popular stocks among hedge funds.

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.

David Abrams

We're going to take a glance at the fresh hedge fund action regarding Asbury Automotive Group, Inc. (NYSE:ABG).

How are hedge funds trading Asbury Automotive Group, Inc. (NYSE:ABG)?

Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ABG 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.

ABG_jun2019

More specifically, Abrams Capital Management was the largest shareholder of Asbury Automotive Group, Inc. (NYSE:ABG), with a stake worth $132 million reported as of the end of March. Trailing Abrams Capital Management was Eminence Capital, which amassed a stake valued at $26.6 million. GLG Partners, PEAK6 Capital Management, and Arrowstreet Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Because Asbury Automotive Group, Inc. (NYSE:ABG) has witnessed a decline in interest from hedge fund managers, we can see that there were a few hedgies that decided to sell off their positions entirely last quarter. Interestingly, David Costen Haley's HBK Investments dumped the largest position of the "upper crust" of funds followed by Insider Monkey, comprising about $1.6 million in stock. Michael Platt and William Reeves's fund, BlueCrest Capital Mgmt., also dropped its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let's now review hedge fund activity in other stocks similar to Asbury Automotive Group, Inc. (NYSE:ABG). These stocks are Seacoast Banking Corporation of Florida (NASDAQ:SBCF), McDermott International, Inc. (NYSE:MDR), Weight Watchers International, Inc. (NASDAQ:WW), and Corcept Therapeutics Incorporated (NASDAQ:CORT). This group of stocks' market caps are closest to ABG's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SBCF,8,44815,2 MDR,22,169071,-1 WW,20,210108,-3 CORT,18,132235,-1 Average,17,139057,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $194 million in ABG's case. McDermott International, Inc. (NYSE:MDR) is the most popular stock in this table. On the other hand Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is the least popular one with only 8 bullish hedge fund positions. Asbury Automotive Group, Inc. (NYSE:ABG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on ABG as the stock returned 18.4% during the same time frame and outperformed the market by an even larger margin.

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

Related Content