The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards ASGN Incorporated (NYSE:ASGN), and what that likely means for the prospects of the company and its stock.
ASGN Incorporated (NYSE:ASGN) investors should be aware of an increase in activity from the world’s largest hedge funds lately. ASGN was in 21 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 18 hedge funds in our database with ASGN holdings at the end of the previous quarter. Overall hedge fund sentiment towards the stock is currently at its all time high. This is usually a very bullish indicator. For example hedge fund positions in Xerox jumped to its all time high by the end of December and the stock returned more than 72% in the following 3 months or so. Another example is Trade Desk Inc. Hedge fund sentiment towards the stock was also at its all time high at the beginning of this year and the stock returned more than 81% in 3.5 months. Similarly Xilinx, Alteryx and EEFT returned more than 40% after hedge fund sentiment hit its all time high at the end of December. We observed similar performances from OKTA, Twilio, CCK, MSCI, MASI and Progressive Corporation (PGR); these stocks returned 37%, 37%, 35%, 29%, 28% and 27% respectively. There were actually more than 500 stocks that hit all time highs in terms of hedge fund sentiment at the end of December. These stocks delivered an average gain of 22.2% in 2019 through April 25th and outperformed the S&P 500 Index by about 5 percentage points.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the recent hedge fund action regarding ASGN Incorporated (NYSE:ASGN).
What does the smart money think about ASGN Incorporated (NYSE:ASGN)?
Heading into the first quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in ASGN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Marshall Wace LLP, managed by Paul Marshall and Ian Wace, holds the largest position in ASGN Incorporated (NYSE:ASGN). Marshall Wace LLP has a $28 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $24.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.
Now, key money managers have jumped into ASGN Incorporated (NYSE:ASGN) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in ASGN Incorporated (NYSE:ASGN). Marshall Wace LLP had $28 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $7.5 million investment in the stock during the quarter. The other funds with brand new ASGN positions are Lawrence Hawkins’s Prosight Capital, Joel Greenblatt’s Gotham Asset Management, and David Costen Haley’s HBK Investments.
Let’s check out hedge fund activity in other stocks similar to ASGN Incorporated (NYSE:ASGN). We will take a look at MOGU Inc. (NYSE:MOG), TreeHouse Foods Inc. (NYSE:THS), CVB Financial Corp. (NASDAQ:CVBF), and Home Bancshares Inc (NASDAQ:HOMB). This group of stocks’ market values match ASGN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $140 million. That figure was $124 million in ASGN’s case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand CVB Financial Corp. (NASDAQ:CVBF) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks ASGN Incorporated (NYSE:ASGN) is more popular among hedge funds. 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. Hedge funds were also right about betting on ASGN, though not to the same extent, as the stock returned 24% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.