Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Should You Be Tempted To ‘Sell’ Alliance Data Systems (ADS) Stock

If you are looking for the best ideas for your portfolio you may want to consider some of Tao Value’s top stock picks. Tao Value, an investment management firm, is cautious about Alliance Data Systems Corp (NYSE:ADS) stock. In its Q4 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Alliance Data Systems Corp (NYSE:ADS) stock. Alliance Data Systems Corp (NYSE:ADS) provides loyalty and marketing services. The stock is down 49.3% since Tao Value’s pitch. Tao Value said the following in the letter:

“Alliance Data Systems (ticker: ADS) dragged our portfolio by -61 bps this quarter. I believe it is moving toward the right direction of de-risking its retail portfolio, yet maybe in a slower than anticipated pace. One major update however is that ADS announced in November to name a new CEO Ralph Andretta, a long time Citi card business executive, just 5 months after they promoted the last CEO Melissa Miller from its own card business. The management shuffle seems excessive and created some uncertainty to our original thesis. Note that we believed ADS would use proceeds from selling non-core businesses wisely for stock buyback and improve per share earning power. I will watch out for new CEO’s capital allocation plan.”

In Q1 2020, the number of bullish hedge fund positions on Alliance Data Systems Corp (NYSE:ADS) stock decreased by about 33% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Alliance Data Systems downside potential. Our calculations showed that Alliance Data Systems Corp (NYSE:ADS) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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 stocks recommended/scorned by legendary Bill Miller. 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. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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