Should You Go Shopping for Shares of Ascena Retail Group Inc (ASNA)?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Ascena Retail Group Inc (NASDAQ:ASNA).

Ascena Retail Group Inc (NASDAQ:ASNA) was in 28 hedge funds’ portfolios at the end of September. ASNA shareholders have witnessed an increase in hedge fund sentiment of late. There were 23 hedge funds in our database with ASNA positions at the end of the previous quarter. At the end of this article we will also compare ASNA to other stocks including Forward Air Corporation (NASDAQ:FWRD), Horace Mann Educators Corporation (NYSE:HMN), and Noah Holdings Limited (ADR) (NYSE:NOAH) to get a better sense of its popularity.

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What does the smart money think about Ascena Retail Group Inc (NASDAQ:ASNA)?

At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 22% jump from one quarter earlier, though ownership remains slightly below where it was two quarters ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Alexander Medina Seaver’s Stadium Capital Management has the most valuable position in Ascena Retail Group Inc (NASDAQ:ASNA), worth close to $82.5 million, corresponding to 26.7% of its total 13F portfolio. Coming in second is Coliseum Capital, managed by Christopher Shackelton and Adam Gray, which holds a $31.4 million position; 11% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Gregg J. Powers’ Private Capital Management, Israel Englander’s Millennium Management and Chuck Royce’s Royce & Associates.

As aggregate interest increased, key money managers have jumped into Ascena Retail Group Inc (NASDAQ:ASNA) headfirst. Melvin Capital Management, managed by Gabriel Plotkin, assembled the most valuable position in Ascena Retail Group Inc (NASDAQ:ASNA). Melvin Capital Management had $4.5 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also made a $3.3 million investment in the stock during the quarter. The other funds with brand new ASNA positions are Neil Chriss’ Hutchin Hill Capital, Sander Gerber’s Hudson Bay Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now take a look at hedge fund activity in other stocks similar to Ascena Retail Group Inc (NASDAQ:ASNA). We will take a look at Forward Air Corporation (NASDAQ:FWRD), Horace Mann Educators Corporation (NYSE:HMN), Noah Holdings Limited (ADR) (NYSE:NOAH), and Cheetah Mobile Inc (ADR) (NYSE:CMCM). This group of stocks’ market valuations match ASNA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FWRD 16 149374 3
HMN 11 28980 -2
NOAH 8 52556 2
CMCM 5 23052 -1

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $175 million in ASNA’s case. Forward Air Corporation (NASDAQ:FWRD) is the most popular stock in this table. On the other hand Cheetah Mobile Inc (ADR) (NYSE:CMCM) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Ascena Retail Group Inc (NASDAQ:ASNA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, and growing more bullish, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None