Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Associated Banc Corp (NYSE:ASB) was in 20 hedge funds’ portfolios at the end of the third quarter of 2019. ASB investors should be aware of an increase in hedge fund sentiment recently. There were 19 hedge funds in our database with ASB holdings at the end of the previous quarter. Our calculations also showed that ASB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard S. Pzena of Pzena Investment Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the latest hedge fund action regarding Associated Banc Corp (NYSE:ASB).
What have hedge funds been doing with Associated Banc Corp (NYSE:ASB)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ASB over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the most valuable position in Associated Banc Corp (NYSE:ASB), worth close to $44.5 million, amounting to 0.2% of its total 13F portfolio. On Pzena Investment Management’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $42.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish encompass Cliff Asness’s AQR Capital Management, Dmitry Balyasny’s Balyasny Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Gillson Capital allocated the biggest weight to Associated Banc Corp (NYSE:ASB), around 0.46% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, dishing out 0.24 percent of its 13F equity portfolio to ASB.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in Associated Banc Corp (NYSE:ASB). Arrowstreet Capital had $2.5 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.3 million position during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Associated Banc Corp (NYSE:ASB) but similarly valued. These stocks are Pan American Silver Corp. (NASDAQ:PAAS), Federated Investors Inc (NYSE:FII), KAR Auction Services Inc (NYSE:KAR), and B2Gold Corp (NYSE:BTG). This group of stocks’ market valuations resemble ASB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAAS | 22 | 328752 | 5 |
| FII | 23 | 213204 | 1 |
| KAR | 30 | 574775 | -2 |
| BTG | 14 | 186035 | -3 |
| Average | 22.25 | 325692 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $209 million in ASB’s case. KAR Auction Services Inc (NYSE:KAR) is the most popular stock in this table. On the other hand B2Gold Corp (NYSE:BTG) is the least popular one with only 14 bullish hedge fund positions. Associated Banc Corp (NYSE:ASB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ASB, though not to the same extent, as the stock returned 6.8% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
