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Ashland Global Holdings (ASH): Hedge Funds In Wait-and-See Mode

Hedge funds are known to underperform the bull markets but that’s not because they are bad at investing. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. Hedge funds underperform because they are hedged. The Standard and Poor’s 500 Total Return Index ETFs returned 27.5% through the end of November. Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same period. An average long/short hedge fund returned only a fraction of this due to the hedges they implement and the large fees they charge. Our research covering the last 18 years indicates that investors can outperform the market by imitating hedge funds’ consensus stock picks rather than directly investing in hedge funds. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ashland Global Holdings Inc.. (NYSE:ASH).

Is Ashland Global Holdings Inc.. (NYSE:ASH) the right investment to pursue these days? The smart money is getting less bullish. The number of bullish hedge fund bets were cut by 1 recently. Our calculations also showed that ASH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are many tools investors can use to assess their stock investments. Two of the most useful tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the S&P 500 by a superb margin (see the details here).

Michael Platt Bluecrest Capital Management

Michael Platt of BlueCrest Capital Mgmt.

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action surrounding Ashland Global Holdings Inc.. (NYSE:ASH).

How are hedge funds trading Ashland Global Holdings Inc.. (NYSE:ASH)?

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in ASH a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

ASH_dec2019

More specifically, Eminence Capital was the largest shareholder of Ashland Global Holdings Inc.. (NYSE:ASH), with a stake worth $402.4 million reported as of the end of September. Trailing Eminence Capital was Diamond Hill Capital, which amassed a stake valued at $116.2 million. Empyrean Capital Partners, Luminus Management, and Cruiser Capital Advisors 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 Cruiser Capital Advisors allocated the biggest weight to Ashland Global Holdings Inc.. (NYSE:ASH), around 63.33% of its portfolio. FrontFour Capital Group is also relatively very bullish on the stock, setting aside 6.88 percent of its 13F equity portfolio to ASH.

Because Ashland Global Holdings Inc.. (NYSE:ASH) has faced bearish sentiment from the smart money, it’s easy to see that there exists a select few money managers who sold off their full holdings last quarter. It’s worth mentioning that David Costen Haley’s HBK Investments said goodbye to the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $36.5 million in stock, and Isaac Corre’s Governors Lane was right behind this move, as the fund dropped about $33.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Ashland Global Holdings Inc.. (NYSE:ASH). We will take a look at ADT Inc. (NYSE:ADT), Stericycle Inc (NASDAQ:SRCL), Radian Group Inc (NYSE:RDN), and ViaSat, Inc. (NASDAQ:VSAT). This group of stocks’ market values are closest to ASH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADT 16 161151 -4
SRCL 16 700061 0
RDN 22 178364 0
VSAT 27 1901555 -1
Average 20.25 735283 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $735 million. That figure was $1197 million in ASH’s case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand ADT Inc. (NYSE:ADT) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Ashland Global Holdings Inc.. (NYSE:ASH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 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 -6.6% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.

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

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