Diamond Hill Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Diamond Hill Small Cap Fund posted a return of -36.17% for the quarter, underperforming its benchmark, the Russell 2000 Index which returned -30.61% in the same quarter. You should check out Diamond Hill Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Diamond Hill Capital highlighted a few stocks and Aaron’s Inc (NYSE:AAN) is one of them. Aaron’s is a lease-to-own retailer. Year-to-date, Aaron’s Inc (NYSE:AAN) stock lost 30.5% and on June 2nd it had a closing price of $38.44. Here is what Diamond Hill Capital said:
“We added shares of rental and leasing services company Aaron’s, Inc. after selling the previous Aaron position in late summer 2019, when the stock price reached our estimate of intrinsic value. Weak revenue trends in Aaron’s brick and mortar stores during the fourth quarter of 2019 drove the stock price down sharply. However, its Progressive business, which processes lease-to-own transactions for third-party retail customers, is still growing revenue around a 20% rate, and it recently signed large retail customers Best Buy and Home Depot. Although Aaron’s will be negatively impacted by the COVID-19 crisis, it should be in a position to gain additional market share when market conditions stabilize.”
In Q4 2019, the number of bullish hedge fund positions on Aaron’s Inc (NYSE:AAN) stock increased by about 78% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with AAN’s growth potential. Our calculations showed that Aaron’s Inc (NYSE:AAN) isn’t 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 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. 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.
