Should You Avoid AutoNation, Inc. (AN)?

Due to the fact that AutoNation, Inc. (NYSE:AN) has faced falling interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds who were dropping their positions entirely heading into Q4. It’s worth mentioning that Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital dropped the biggest investment of all the hedgies watched by Insider Monkey, totaling an estimated $28.3 million in stock, and Michael Messner’s Seminole Capital (Investment Mgmt) was right behind this move, as the fund dropped about $23.4 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to AutoNation, Inc. (NYSE:AN). We will take a look at Duke Realty Corp (NYSE:DRE), Weatherford International Ltd (NYSE:WFT), Broadridge Financial Solutions, Inc. (NYSE:BR), and Iron Mountain Incorporated (NYSE:IRM). All of these stocks’ market caps are similar to AN’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $1.34 billion in AN’s case. Weatherford International Ltd (NYSE:WFT) is the most popular stock in this table. On the other hand Duke Realty Corp (NYSE:DRE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks AutoNation, Inc. (NYSE:AN) is more popular among hedge funds, however, it is also important to note that Edward Lampert has been winding down his position in AN for some time now, dropping as much as 6% of his holding during the third quarter alone. Therefore, we believe it may be a good idea to analyze it in detail to find out if this stock is a viable candidate for a long position.