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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of AdvanSix Inc. (NYSE:ASIX) based on that data and determine whether they were really smart about the stock.
AdvanSix Inc. (NYSE:ASIX) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds' portfolios at the end of March. At the end of this article we will also compare ASIX to other stocks including Evofem Biosciences, Inc. (NASDAQ:EVFM), Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH), and Landmark Infrastructure Partners LP (NASDAQ:LMRK) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several gauges stock traders put to use to appraise stocks. A couple of the most under-the-radar gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the broader indices by a very impressive margin (see the details here).
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David E. Shaw of D.E. Shaw[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 most profitable companies in the world to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's view the fresh hedge fund action surrounding AdvanSix Inc. (NYSE:ASIX).
What have hedge funds been doing with AdvanSix Inc. (NYSE:ASIX)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 19 hedge funds with a bullish position in ASIX a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in AdvanSix Inc. (NYSE:ASIX) was held by Firefly Value Partners, which reported holding $19.3 million worth of stock at the end of September. It was followed by Ancient Art (Teton Capital) with a $7 million position. Other investors bullish on the company included D E Shaw, Arrowstreet Capital, and Solas Capital Management. In terms of the portfolio weights assigned to each position Firefly Value Partners allocated the biggest weight to AdvanSix Inc. (NYSE:ASIX), around 3.64% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, dishing out 2.53 percent of its 13F equity portfolio to ASIX.
Seeing as AdvanSix Inc. (NYSE:ASIX) has faced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there was a specific group of money managers who sold off their entire stakes by the end of the first quarter. Intriguingly, Renaissance Technologies dumped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $5.6 million in stock. Bruce Kovner's fund, Caxton Associates LP, also said goodbye to its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as AdvanSix Inc. (NYSE:ASIX) but similarly valued. These stocks are Evofem Biosciences, Inc. (NASDAQ:EVFM), Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH), Landmark Infrastructure Partners LP (NASDAQ:LMRK), and Equity Bancshares, Inc. (NASDAQ:EQBK). This group of stocks' market valuations match ASIX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVFM,4,3603,2 SPWH,26,64257,-1 LMRK,1,894,-1 EQBK,5,24525,0 Average,9,23320,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $44 million in ASIX's case. Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH) is the most popular stock in this table. On the other hand Landmark Infrastructure Partners LP (NASDAQ:LMRK) is the least popular one with only 1 bullish hedge fund positions. AdvanSix Inc. (NYSE:ASIX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately ASIX wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ASIX were disappointed as the stock returned 17.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.