It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Ashland Global Holdings Inc.. (NYSE:ASH) changed during the first quarter.
Ashland Global Holdings Inc.. (NYSE:ASH) shareholders have witnessed a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that ASH isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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.
We're going to take a look at the latest hedge fund action surrounding Ashland Global Holdings Inc.. (NYSE:ASH).
How have hedgies been trading Ashland Global Holdings Inc.. (NYSE:ASH)?
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ASH over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ashland Global Holdings Inc.. (NYSE:ASH) was held by Luminus Management, which reported holding $185.3 million worth of stock at the end of March. It was followed by Empyrean Capital Partners with a $126.6 million position. Other investors bullish on the company included Cruiser Capital Advisors, Millennium Management, and York Capital Management.
Seeing as Ashland Global Holdings Inc.. (NYSE:ASH) has witnessed falling interest from hedge fund managers, it's safe to say that there was a specific group of money managers who sold off their full holdings last quarter. It's worth mentioning that Daniel S. Och's OZ Management dropped the largest stake of the "upper crust" of funds followed by Insider Monkey, valued at about $149 million in stock, and Robert Joseph Caruso's Select Equity Group was right behind this move, as the fund cut about $46.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 7 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Ashland Global Holdings Inc.. (NYSE:ASH). These stocks are SYNNEX Corporation (NYSE:SNX), Horizon Pharma Public Limited Company (NASDAQ:HZNP), Globus Medical Inc (NYSE:GMED), and H&R Block, Inc. (NYSE:HRB). All of these stocks' market caps match ASH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNX,11,158063,0 HZNP,41,1304450,13 GMED,24,265383,6 HRB,16,238498,-2 Average,23,491599,4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $492 million. That figure was $1175 million in ASH's case. Horizon Pharma Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand SYNNEX Corporation (NYSE:SNX) is the least popular one with only 11 bullish hedge fund positions. Ashland Global Holdings Inc.. (NYSE:ASH) 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 ASH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ASH were disappointed as the stock returned -2.8% 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.