We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was ASGN Incorporated (NYSE:ASGN).
ASGN Incorporated (NYSE:ASGN) has experienced an increase in hedge fund interest lately. ASGN was in 18 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 17 hedge funds in our database with ASGN holdings at the end of the previous quarter. Our calculations also showed that ASGN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the recent hedge fund action regarding ASGN Incorporated (NYSE:ASGN).
What does smart money think about ASGN Incorporated (NYSE:ASGN)?
Heading into the first quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ASGN over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the most valuable position in ASGN Incorporated (NYSE:ASGN), worth close to $41.7 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $15.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions contain Noam Gottesman’s GLG Partners, Robert Joseph Caruso’s Select Equity Group and Ira Unschuld’s Brant Point Investment Management. In terms of the portfolio weights assigned to each position Brant Point Investment Management allocated the biggest weight to ASGN Incorporated (NYSE:ASGN), around 0.82% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, earmarking 0.74 percent of its 13F equity portfolio to ASGN.
Now, key hedge funds have been driving this bullishness. Manatuck Hill Partners, managed by Mark Broach, assembled the largest position in ASGN Incorporated (NYSE:ASGN). Manatuck Hill Partners had $1.4 million invested in the company at the end of the quarter. Michael Kharitonov and Jon David McAuliffe’s Voleon Capital also made a $1.4 million investment in the stock during the quarter. The other funds with brand new ASGN positions are Peter Muller’s PDT Partners and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ASGN Incorporated (NYSE:ASGN) but similarly valued. These stocks are SAGE Therapeutics Inc (NASDAQ:SAGE), FibroGen Inc (NASDAQ:FGEN), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), and Macquarie Infrastructure Corporation (NYSE:MIC). This group of stocks’ market valuations are closest to ASGN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAGE | 35 | 339592 | 3 |
| FGEN | 21 | 359960 | -4 |
| ADPT | 22 | 2003392 | 0 |
| MIC | 34 | 275388 | 7 |
| Average | 28 | 744583 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $745 million. That figure was $99 million in ASGN’s case. SAGE Therapeutics Inc (NASDAQ:SAGE) is the most popular stock in this table. On the other hand FibroGen Inc (NASDAQ:FGEN) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks ASGN Incorporated (NYSE:ASGN) is even less popular than FGEN. Hedge funds dodged a bullet by taking a bearish stance towards ASGN. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately ASGN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ASGN investors were disappointed as the stock returned -53.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
