Hedge Funds Are Crazy About Abercrombie & Fitch Co. (ANF)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Abercrombie & Fitch Co. (NYSE:ANF) from the perspective of those elite funds.

Abercrombie & Fitch Co. (NYSE:ANF) investors should be aware of an increase in hedge fund sentiment recently. ANF was in 22 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with ANF positions at the end of the previous quarter. At the end of this article we will also compare ANF to other stocks including Tetra Tech, Inc. (NASDAQ:TTEK), Hatteras Financial Corp. (NYSE:HTS), and WNS (Holdings) Limited (ADR) (NYSE:WNS) to get a better sense of its popularity.

In the eyes of most traders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are greater than an 8000 funds trading at the moment, Our experts hone in on the moguls of this group, around 700 funds. Most estimates calculate that this group of people orchestrate the lion’s share of the smart money’s total asset base, and by monitoring their top stock picks, Insider Monkey has deciphered several investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, we’re going to take a peek at the latest action encompassing Abercrombie & Fitch Co. (NYSE:ANF).

How are hedge funds trading Abercrombie & Fitch Co. (NYSE:ANF)?

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 16% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brett Barakett’s Tremblant Capital has the number one call position in Abercrombie & Fitch Co. (NYSE:ANF), worth close to $28.1 million, comprising 1.8% of its total 13F portfolio. The fund also holds $24.4 million worth of ANF shares; 1.6% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism include David Harding’s Winton Capital Management, John Tompkins’s Tyvor Capital and Ken Griffin’s Citadel Investment Group.

Consequently, key hedge funds were breaking ground themselves. The same Tremblant Capital assembled the two most outsized positions in Abercrombie & Fitch Co. (NYSE:ANF). Neil Chriss’s Hutchin Hill Capital has also joined the party, having initiated a new position that amounted to $6.41 million worth of stock at the end of the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, and Chuck Royce’s Royce & Associates.

Let’s now review hedge fund activity in other stocks similar to Abercrombie & Fitch Co. (NYSE:ANF). These stocks are Tetra Tech, Inc. (NASDAQ:TTEK), Hatteras Financial Corp. (NYSE:HTS), WNS (Holdings) Limited (ADR) (NYSE:WNS), and Alon USA Partners LP (NYSE:ALDW). All of these stocks’ market caps are similar to ANF’s market cap.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. Tetra Tech, Inc. (NASDAQ:TTEK) is the most popular stock in this table. On the other hand Alon USA Partners LP (NYSE:ALDW) is the least popular one with only 5 bullish hedge fund positions. Abercrombie & Fitch Co. (NYSE:ANF) outshines the lot, having attracted $168 million worth of investments from 22 elite investors. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.