Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 15 S&P 500 stocks among hedge funds at the end of December 2018 yielded an average return of 19.7% year-to-date, vs. a gain of 13.1% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Associated Banc Corp (NYSE:ASB).
Associated Banc Corp (NYSE:ASB) shareholders have witnessed an increase in support from the world's most elite money managers recently. Our calculations also showed that ASB 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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's analyze the key hedge fund action surrounding Associated Banc Corp (NYSE:ASB).
How are hedge funds trading Associated Banc Corp (NYSE:ASB)?
At Q4's end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in ASB a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Associated Banc Corp (NYSE:ASB) was held by Citadel Investment Group, which reported holding $76.5 million worth of stock at the end of December. It was followed by Millennium Management with a $57 million position. Other investors bullish on the company included Pzena Investment Management, Renaissance Technologies, and AQR Capital Management.
With a general bullishness amongst the heavyweights, some big names have jumped into Associated Banc Corp (NYSE:ASB) headfirst. D E Shaw, managed by D. E. Shaw, initiated the most outsized position in Associated Banc Corp (NYSE:ASB). D E Shaw had $2.2 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp and David Andre and Astro Teller's Cerebellum Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Associated Banc Corp (NYSE:ASB) but similarly valued. These stocks are Horizon Pharma Public Limited Company (NASDAQ:HZNP), PNM Resources, Inc. (NYSE:PNM), The Brink's Company (NYSE:BCO), and Allogene Therapeutics, Inc. (NASDAQ:ALLO). This group of stocks' market caps resemble ASB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HZNP,28,872682,7 PNM,18,323145,-1 BCO,22,491477,-2 ALLO,10,130155,10 Average,19.5,454365,3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $454 million. That figure was $221 million in ASB's case. Horizon Pharma Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Allogene Therapeutics, Inc. (NASDAQ:ALLO) is the least popular one with only 10 bullish hedge fund positions. Associated Banc Corp (NYSE:ASB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ASB wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); ASB investors were disappointed as the stock returned 12.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.