U.S. Markets close in 2 hrs 15 mins

Were Hedge Funds Right About Flocking Into Alexander & Baldwin Inc (ALEX)?

Abigail Fisher

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Alexander & Baldwin Inc (NYSE:ALEX).

Is Alexander & Baldwin Inc (NYSE:ALEX) a buy right now? Investors who are in the know are buying. The number of bullish hedge fund positions went up by 2 in recent months. Our calculations also showed that ALEX isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny

Let's take a peek at the recent hedge fund action surrounding Alexander & Baldwin Inc (NYSE:ALEX).

Hedge fund activity in Alexander & Baldwin Inc (NYSE:ALEX)

Heading into the first quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in ALEX 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.

ALEX_apr2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Scion Asset Management, managed by Michael Burry, holds the biggest position in Alexander & Baldwin Inc (NYSE:ALEX). Scion Asset Management has a $9.2 million position in the stock, comprising 8.9% of its 13F portfolio. The second most bullish fund manager is Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $6.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism encompass Noam Gottesman's GLG Partners, Cliff Asness's AQR Capital Management and Ken Griffin's Citadel Investment Group.

Now, some big names were breaking ground themselves. Scion Asset Management, managed by Michael Burry, initiated the largest position in Alexander & Baldwin Inc (NYSE:ALEX). Scion Asset Management had $9.2 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw, and Matthew Tewksbury's Stevens Capital Management.

Let's now take a look at hedge fund activity in other stocks similar to Alexander & Baldwin Inc (NYSE:ALEX). These stocks are Abercrombie & Fitch Co. (NYSE:ANF), TTEC Holdings, Inc. (NASDAQ:TTEC), GreenTree Hospitality Group Ltd. (NYSE:GHG), and Plantronics, Inc. (NYSE:PLT). This group of stocks' market caps are closest to ALEX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANF,22,127847,2 TTEC,15,19967,1 GHG,7,17999,-4 PLT,16,72043,-9 Average,15,59464,-2.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $26 million in ALEX's case. Abercrombie & Fitch Co. (NYSE:ANF) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 7 bullish hedge fund positions. Alexander & Baldwin Inc (NYSE:ALEX) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on ALEX as the stock returned 26.8% and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content