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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Abercrombie & Fitch Co. (NYSE:ANF) based on those filings.
Is Abercrombie & Fitch Co. (NYSE:ANF) an attractive investment right now? The smart money was taking a bearish view. The number of long hedge fund positions shrunk by 8 in recent months. Abercrombie & Fitch Co. (NYSE:ANF) was in 20 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that ANF isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Peter Rathjens of Arrowstreet Capital
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Do Hedge Funds Think ANF Is A Good Stock To Buy Now?
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ANF over the last 23 quarters. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Paradice Investment Management held the most valuable stake in Abercrombie & Fitch Co. (NYSE:ANF), which was worth $95.3 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $75.8 million worth of shares. Citadel Investment Group, D E Shaw, and Contrarius Investment 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 Divisar Capital allocated the biggest weight to Abercrombie & Fitch Co. (NYSE:ANF), around 6.77% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 4.58 percent of its 13F equity portfolio to ANF.
Because Abercrombie & Fitch Co. (NYSE:ANF) has experienced bearish sentiment from hedge fund managers, it's easy to see that there was a specific group of funds that slashed their positions entirely by the end of the first quarter. Interestingly, Gavin Baker's Atreides Management dropped the biggest investment of all the hedgies tracked by Insider Monkey, totaling about $14.9 million in stock, and Michael Zimmerman's Prentice Capital Management was right behind this move, as the fund sold off about $12.7 million worth. These transactions are interesting, as total hedge fund interest dropped by 8 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks similar to Abercrombie & Fitch Co. (NYSE:ANF). We will take a look at Compass Minerals International, Inc. (NYSE:CMP), Canoo Inc. (NASDAQ:GOEV), Arbor Realty Trust, Inc. (NYSE:ABR), Dillard's, Inc. (NYSE:DDS), Quanterix Corporation (NASDAQ:QTRX), Axsome Therapeutics, Inc. (NASDAQ:AXSM), and Heartland Financial USA Inc (NASDAQ:HTLF). This group of stocks' market valuations are similar to ANF's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMP,8,10647,-2 GOEV,16,14846,-1 ABR,21,103593,7 DDS,13,11676,-2 QTRX,19,177897,0 AXSM,17,354033,-5 HTLF,12,45440,2 Average,15.1,102590,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $413 million in ANF's case. Arbor Realty Trust, Inc. (NYSE:ABR) is the most popular stock in this table. On the other hand Compass Minerals International, Inc. (NYSE:CMP) is the least popular one with only 8 bullish hedge fund positions. Abercrombie & Fitch Co. (NYSE:ANF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANF is 60.8. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on ANF, though not to the same extent, as the stock returned 16.7% since Q1 (through July 16th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.