The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider Abercrombie & Fitch Co. (NYSE:ANF) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Abercrombie & Fitch Co. (NYSE:ANF) was in 25 hedge funds' portfolios at the end of March. ANF has seen an increase in enthusiasm from smart money in recent months. There were 22 hedge funds in our database with ANF holdings at the end of the previous quarter. Our calculations also showed that ANF 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.
Let's analyze the key hedge fund action encompassing Abercrombie & Fitch Co. (NYSE:ANF).
What does the smart money think about Abercrombie & Fitch Co. (NYSE:ANF)?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in ANF a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Abercrombie & Fitch Co. (NYSE:ANF), which was worth $52.4 million at the end of the first quarter. On the second spot was D E Shaw which amassed $35.2 million worth of shares. Moreover, Maverick Capital, Citadel Investment Group, and Balyasny Asset Management were also bullish on Abercrombie & Fitch Co. (NYSE:ANF), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, created the biggest position in Abercrombie & Fitch Co. (NYSE:ANF). Winton Capital Management had $12.2 million invested in the company at the end of the quarter. Mike Vranos's Ellington also initiated a $6 million position during the quarter. The following funds were also among the new ANF investors: Gavin Saitowitz and Cisco J. del Valle's Springbok Capital, Philippe Laffont's Coatue Management, and Joel Greenblatt's Gotham Asset Management.
Let's now take a look at hedge fund activity in other stocks similar to Abercrombie & Fitch Co. (NYSE:ANF). We will take a look at ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Endo International plc (NASDAQ:ENDP), The Michaels Companies, Inc. (NASDAQ:MIK), and Northwest Bancshares, Inc. (NASDAQ:NWBI). All of these stocks' market caps resemble ANF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SFBS,10,10546,-1 ENDP,19,337424,-4 MIK,32,157799,2 NWBI,11,68814,2 Average,18,143646,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $236 million in ANF's case. Michaels Companies Inc (NASDAQ:MIK) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 10 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. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ANF wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ANF were disappointed as the stock returned -36.2% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.