Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Abercrombie & Fitch Co. (NYSE:ANF) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Abercrombie & Fitch Co. (NYSE:ANF) has seen a decrease in activity from the world’s largest hedge funds recently. Abercrombie & Fitch Co. (NYSE:ANF) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that ANF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a gander at the recent hedge fund action surrounding Abercrombie & Fitch Co. (NYSE:ANF).
Dmitry Balyasny of Balyasny Asset Management
Do Hedge Funds Think ANF Is A Good Stock To Buy Now?
At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in ANF a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Paradice Investment Management was the largest shareholder of Abercrombie & Fitch Co. (NYSE:ANF), with a stake worth $106.3 million reported as of the end of September. Trailing Paradice Investment Management was Arrowstreet Capital, which amassed a stake valued at $77.9 million. Melvin Capital Management, Citadel Investment Group, and Divisar Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Divisar Capital allocated the biggest weight to Abercrombie & Fitch Co. (NYSE:ANF), around 6.96% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, earmarking 4.81 percent of its 13F equity portfolio to ANF.
Because Abercrombie & Fitch Co. (NYSE:ANF) has experienced declining sentiment from the smart money, we can see that there was a specific group of hedgies who sold off their full holdings by the end of the third quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management said goodbye to the largest position of all the hedgies watched by Insider Monkey, totaling an estimated $52.2 million in stock, and Renaissance Technologies was right behind this move, as the fund said goodbye to about $9.9 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Abercrombie & Fitch Co. (NYSE:ANF) but similarly valued. These stocks are Patria Investments Limited (NASDAQ:PAX), TreeHouse Foods Inc. (NYSE:THS), N-able Inc. (NYSE:NABL), Pactiv Evergreen Inc. (NASDAQ:PTVE), American Well Corporation (NYSE:AMWL), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), and Arqit Quantum Inc. (NASDAQ:ARQQ). This group of stocks’ market values are similar to ANF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAX | 15 | 162601 | 0 |
| THS | 20 | 274337 | -2 |
| NABL | 11 | 829545 | 11 |
| PTVE | 6 | 95418 | 0 |
| AMWL | 24 | 79099 | 4 |
| IBA | 2 | 32511 | 0 |
| ARQQ | 9 | 17859 | 9 |
| Average | 12.4 | 213053 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $416 million in ANF’s case. American Well Corporation (NYSE:AMWL) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Abercrombie & Fitch Co. (NYSE:ANF) is more popular among hedge funds. Our overall hedge fund sentiment score for ANF is 81.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on ANF as the stock returned 3.6% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Abercrombie & Fitch Co (NYSE:ANF)
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Disclosure: None. This article was originally published at Insider Monkey.
