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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Asbury Automotive Group, Inc. (NYSE:ABG).
Asbury Automotive Group, Inc. (NYSE:ABG) investors should pay attention to a decrease in hedge fund interest recently. Asbury Automotive Group, Inc. (NYSE:ABG) was in 20 hedge funds' portfolios at the end of March. The all time high for this statistic is 33. Our calculations also showed that ABG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Abrams of Abrams Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 we're going to take a peek at the latest hedge fund action surrounding Asbury Automotive Group, Inc. (NYSE:ABG).
Do Hedge Funds Think ABG Is A Good Stock To Buy Now?
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in ABG a year ago. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Abrams Capital Management held the most valuable stake in Asbury Automotive Group, Inc. (NYSE:ABG), which was worth $416.2 million at the end of the fourth quarter. On the second spot was Impactive Capital which amassed $156 million worth of shares. Simcoe Capital Management, Eminence Capital, and Lakewood 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 Impactive Capital allocated the biggest weight to Asbury Automotive Group, Inc. (NYSE:ABG), around 19.3% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, earmarking 15.03 percent of its 13F equity portfolio to ABG.
Seeing as Asbury Automotive Group, Inc. (NYSE:ABG) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of money managers who were dropping their positions entirely in the first quarter. It's worth mentioning that Steve Cohen's Point72 Asset Management cut the largest position of all the hedgies tracked by Insider Monkey, totaling close to $6.6 million in stock, and Marc Majzner's Clearline Capital was right behind this move, as the fund said goodbye to about $6.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Asbury Automotive Group, Inc. (NYSE:ABG) but similarly valued. These stocks are Array Technologies, Inc. (NASDAQ:ARRY), CONMED Corporation (NYSE:CNMD), Wingstop Inc (NASDAQ:WING), Tenable Holdings, Inc. (NASDAQ:TENB), Advantage Solutions Inc. (NASDAQ:ADV), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), and GoHealth, Inc. (NASDAQ:GOCO). This group of stocks' market valuations are closest to ABG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARRY,30,486103,1 CNMD,23,236802,-5 WING,23,233958,-5 TENB,32,532519,-7 ADV,24,605969,5 AJRD,30,786292,-6 GOCO,17,549530,-1 Average,25.6,490168,-2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $490 million. That figure was $903 million in ABG's case. Tenable Holdings, Inc. (NASDAQ:TENB) is the most popular stock in this table. On the other hand GoHealth, Inc. (NASDAQ:GOCO) is the least popular one with only 17 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 overall hedge fund sentiment score for ABG is 30.2. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately ABG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ABG investors were disappointed as the stock returned -6.3% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.