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Hedge Funds Buying Ashland Global Holdings Inc. (ASH)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Ashland Global Holdings Inc.. (NYSE:ASH) based on that data.

Is Ashland Global Holdings Inc.. (NYSE:ASH) an attractive investment today? The smart money is getting more optimistic. The number of long hedge fund positions advanced by 2 recently. Our calculations also showed that ASH isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 51 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s analyze the fresh hedge fund action surrounding Ashland Global Holdings Inc.. (NYSE:ASH).

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

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ASH over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Ashland Global Holdings Inc.. (NYSE:ASH) was held by Eminence Capital, which reported holding $282.2 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $110.5 million position. Other investors bullish on the company included Cruiser Capital Advisors, Omega Advisors, and Empyrean Capital Partners. 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 59.56% of its 13F portfolio. Appian Way Asset Management is also relatively very bullish on the stock, setting aside 5.52 percent of its 13F equity portfolio to ASH.

Consequently, key money managers were leading the bulls’ herd. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, established the biggest position in Ashland Global Holdings Inc.. (NYSE:ASH). Empyrean Capital Partners had $26.7 million invested in the company at the end of the quarter. Andrew Byington’s Appian Way Asset Management also made a $7.5 million investment in the stock during the quarter. The other funds with brand new ASH positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Robert Pohly’s Samlyn Capital, and David Harding’s Winton Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Ashland Global Holdings Inc.. (NYSE:ASH). We will take a look at NorthWestern Corporation (NYSE:NWE), Cameco Corporation (NYSE:CCJ), Pan American Silver Corp. (NASDAQ:PAAS), and American States Water Co (NYSE:AWR). This group of stocks’ market valuations match ASH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NWE 19 125827 0
CCJ 24 267635 -4
PAAS 30 341386 0
AWR 19 50907 -2
Average 23 196439 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $677 million in ASH’s case. Pan American Silver Corp. (NASDAQ:PAAS) is the most popular stock in this table. On the other hand NorthWestern Corporation (NYSE:NWE) is the least popular one with only 19 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 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on ASH as the stock returned 34.7% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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