The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Asbury Automotive Group, Inc. (NYSE:ABG) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Asbury Automotive Group, Inc. (NYSE:ABG) investors should be aware of an increase in hedge fund sentiment lately. Asbury Automotive Group, Inc. (NYSE:ABG) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistics is 33. There were 19 hedge funds in our database with ABG holdings at the end of March. Our calculations also showed that ABG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are many signals market participants have at their disposal to evaluate stocks. A duo of the less known signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the S&P 500 by a superb margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a peek at the recent hedge fund action surrounding Asbury Automotive Group, Inc. (NYSE:ABG).
How are hedge funds trading Asbury Automotive Group, Inc. (NYSE:ABG)?
At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the first quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in ABG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Abrams Capital Management was the largest shareholder of Asbury Automotive Group, Inc. (NYSE:ABG), with a stake worth $163.8 million reported as of the end of September. Trailing Abrams Capital Management was Impactive Capital, which amassed a stake valued at $47.6 million. Eminence Capital, Arrowstreet Capital, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to Asbury Automotive Group, Inc. (NYSE:ABG), around 15.19% of its 13F portfolio. Abrams Capital Management is also relatively very bullish on the stock, designating 5.29 percent of its 13F equity portfolio to ABG.
As industrywide interest jumped, some big names were breaking ground themselves. Lakewood Capital Management, managed by Anthony Bozza, assembled the biggest position in Asbury Automotive Group, Inc. (NYSE:ABG). Lakewood Capital Management had $5.7 million invested in the company at the end of the quarter. Renaissance Technologies also made a $3.2 million investment in the stock during the quarter. The following funds were also among the new ABG investors: Lee Ainslie’s Maverick Capital, Brett Huckelbridge’s Steel Canyon Capital, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Asbury Automotive Group, Inc. (NYSE:ABG). These stocks are Zogenix, Inc. (NASDAQ:ZGNX), Luminex Corporation (NASDAQ:LMNX), Rush Enterprises, Inc. (NASDAQ:RUSHA), Cerence Inc. (NASDAQ:CRNC), Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA), Urban Outfitters, Inc. (NASDAQ:URBN), and Comfort Systems USA, Inc. (NYSE:FIX). This group of stocks’ market values are similar to ABG’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $315 million in ABG’s case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand Cerence Inc. (NASDAQ:CRNC) is the least popular one with only 14 bullish hedge fund positions. Asbury Automotive Group, Inc. (NYSE:ABG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABG is 52.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Hedge funds were also right about betting on ABG as the stock returned 20.4% during Q3 (through September 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.