AutoNation, Inc. (AN): Are Hedge Funds Right About This Stock?

Is AutoNation, Inc. (NYSE:AN) a bargain? The best stock pickers are becoming less confident. The number of long hedge fund positions retreated by 4 recently.

At the moment, there are tons of indicators market participants can use to monitor publicly traded companies. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the market by a significant amount (see just how much).

Equally as beneficial, optimistic insider trading sentiment is a second way to break down the marketplace. Just as you’d expect, there are a variety of incentives for an insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the impressive potential of this method if “monkeys” know what to do (learn more here).

Keeping this in mind, let’s take a glance at the key action encompassing AutoNation, Inc. (NYSE:AN).

What have hedge funds been doing with AutoNation, Inc. (NYSE:AN)?

At the end of the first quarter, a total of 20 of the hedge funds we track were bullish in this stock, a change of -17% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably.

According to our comprehensive database, ESL Investments, managed by Edward Lampert, holds the biggest position in AutoNation, Inc. (NYSE:AN). ESL Investments has a $1.3757 billion position in the stock, comprising 34.2% of its 13F portfolio. On ESL Investments’s heels is Egerton Capital Limited, managed by John Armitage, which held a $85.2 million position; 2.1% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Michael Larson’s Bill & Melinda Gates Foundation Trust, Mario Gabelli’s GAMCO Investors and D. E. Shaw’s D E Shaw.

Due to the fact that AutoNation, Inc. (NYSE:AN) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there is a sect of money managers that slashed their entire stakes in Q1. At the top of the heap, Murray Stahl’s Horizon Asset Management dropped the biggest investment of all the hedgies we track, worth about $139.5 million in stock.. James Dondero’s fund, Highland Capital Management, also said goodbye to its stock, about $10.2 million worth. These moves are important to note, as total hedge fund interest dropped by 4 funds in Q1.

How are insiders trading AutoNation, Inc. (NYSE:AN)?

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last six-month time frame, AutoNation, Inc. (NYSE:AN) has experienced zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to AutoNation, Inc. (NYSE:AN). These stocks are Sonic Automotive Inc (NYSE:SAH), KAR Auction Services Inc (NYSE:KAR), CarMax, Inc (NYSE:KMX), Penske Automotive Group, Inc. (NYSE:PAG), and Copart, Inc. (NASDAQ:CPRT). This group of stocks are the members of the auto dealerships industry and their market caps are similar to AN’s market cap.