In this article we will analyze whether Associated Banc Corp (NYSE:ASB) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is ASB a good stock to buy now? Associated Banc Corp (NYSE:ASB) investors should be aware of a decrease in hedge fund sentiment of late. Associated Banc Corp (NYSE:ASB) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 24. 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 for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a look at the new hedge fund action regarding Associated Banc Corp (NYSE:ASB).
Do Hedge Funds Think ASB Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ASB over the last 21 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Pzena Investment Management held the most valuable stake in Associated Banc Corp (NYSE:ASB), which was worth $41 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $40.5 million worth of shares. Balyasny Asset Management, Arrowstreet Capital, and Citadel Investment Group 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 Interval Partners allocated the biggest weight to Associated Banc Corp (NYSE:ASB), around 0.34% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, dishing out 0.26 percent of its 13F equity portfolio to ASB.
Due to the fact that Associated Banc Corp (NYSE:ASB) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds that elected to cut their positions entirely heading into Q4. Interestingly, Chuck Royce’s Royce & Associates said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, worth an estimated $3.9 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also said goodbye to its stock, about $1.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Associated Banc Corp (NYSE:ASB). These stocks are Integer Holdings Corporation (NYSE:ITGR), South Jersey Industries Inc (NYSE:SJI), Medifast, Inc. (NYSE:MED), Brinker International, Inc. (NYSE:EAT), Visteon Corp (NASDAQ:VC), Cardlytics, Inc. (NASDAQ:CDLX), and FormFactor, Inc. (NASDAQ:FORM). 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 |
|---|---|---|---|
| ITGR | 22 | 145970 | 5 |
| SJI | 13 | 80266 | -1 |
| MED | 21 | 316364 | 3 |
| EAT | 35 | 437585 | 8 |
| VC | 28 | 319170 | 5 |
| CDLX | 29 | 599537 | 2 |
| FORM | 20 | 92137 | -3 |
| Average | 24 | 284433 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $177 million in ASB’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand South Jersey Industries Inc (NYSE:SJI) is the least popular one with only 13 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 overall hedge fund sentiment score for ASB is 48.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on ASB as the stock returned 31.9% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Follow Associated Banc-Corp (NYSE:ASB)
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Disclosure: None. This article was originally published at Insider Monkey.
