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Hedge Funds Are Getting Bullish On Asbury Automotive Group, Inc. (ABG)

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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Asbury Automotive Group, Inc. (NYSE:ABG).

Asbury Automotive Group, Inc. (NYSE:ABG) shareholders have witnessed an increase in activity from the world's largest hedge funds of late. Asbury Automotive Group, Inc. (NYSE:ABG) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistic is 33. There were 20 hedge funds in our database with ABG positions at the end of the first quarter. Our calculations also showed that ABG isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Abrams
David Abrams

David Abrams of Abrams Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind we're going to take a gander at the fresh hedge fund action surrounding Asbury Automotive Group, Inc. (NYSE:ABG).

Do Hedge Funds Think ABG Is A Good Stock To Buy Now?

At second quarter's end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in ABG a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Asbury Automotive Group, Inc. (NYSE:ABG) was held by Abrams Capital Management, which reported holding $363 million worth of stock at the end of June. It was followed by Impactive Capital with a $166.4 million position. Other investors bullish on the company included Simcoe Capital Management, Eminence Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to Asbury Automotive Group, Inc. (NYSE:ABG), around 13.81% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, dishing out 12.29 percent of its 13F equity portfolio to ABG.

Now, some big names were leading the bulls' herd. Renaissance Technologies, initiated the most valuable position in Asbury Automotive Group, Inc. (NYSE:ABG). Renaissance Technologies had $9.3 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $3.9 million position during the quarter. The following funds were also among the new ABG investors: Paul Tudor Jones's Tudor Investment Corp, Jerome L. Simon's Lonestar Capital Management, and Michael Gelband's ExodusPoint Capital.

Let's now take a look at 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 Sogou Inc. (NYSE:SOGO), Liberty Latin America Ltd. (NASDAQ:LILAK), Spirit Airlines Incorporated (NYSE:SAVE), VNET Group Inc (NASDAQ:VNET), Clearway Energy, Inc. (NYSE:CWEN), Welbilt, Inc. (NYSE:WBT), and AAON, Inc. (NASDAQ:AAON). This group of stocks' market values resemble ABG's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SOGO,19,147506,3 LILAK,27,556849,-2 SAVE,29,247716,5 VNET,23,264551,-7 CWEN,21,187962,-3 WBT,44,984182,16 AAON,17,42863,1 Average,25.7,347376,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $347 million. That figure was $821 million in ABG's case. Welbilt, Inc. (NYSE:WBT) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 17 bullish hedge fund positions. Asbury Automotive Group, Inc. (NYSE:ABG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABG is 50.3. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on ABG as the stock returned 22.9% since the end of Q2 (through 10/15) 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.