Does Ascena Retail Group Inc (NASDAQ:ASNA) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Ascena Retail Group Inc (NASDAQ:ASNA) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds’ portfolios at the end of March. At the end of this article we will also compare ASNA to other stocks including Molecular Templates, Inc. (NASDAQ:MTEM), The Bank of Princeton (NASDAQ:BPRN), and THL Credit, Inc. (NASDAQ:TCRD) to get a better sense of its popularity.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the fresh hedge fund action surrounding Ascena Retail Group Inc (NASDAQ:ASNA).
What does smart money think about Ascena Retail Group Inc (NASDAQ:ASNA)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in ASNA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ascena Retail Group Inc (NASDAQ:ASNA) was held by Stadium Capital Management, which reported holding $20.8 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $7.3 million position. Other investors bullish on the company included Arrowstreet Capital, Balyasny Asset Management, and AQR Capital Management.
Due to the fact that Ascena Retail Group Inc (NASDAQ:ASNA) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that decided to sell off their entire stakes last quarter. Interestingly, Chuck Royce’s Royce & Associates cut the largest position of all the hedgies tracked by Insider Monkey, totaling an estimated $2.4 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund said goodbye to about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ascena Retail Group Inc (NASDAQ:ASNA) but similarly valued. These stocks are Molecular Templates, Inc. (NASDAQ:MTEM), The Bank of Princeton (NASDAQ:BPRN), THL Credit, Inc. (NASDAQ:TCRD), and Liquidia Technologies, Inc. (NASDAQ:LQDA). This group of stocks’ market valuations are closest to ASNA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTEM | 10 | 41833 | 0 |
| BPRN | 3 | 16404 | -1 |
| TCRD | 6 | 22612 | 1 |
| LQDA | 11 | 28517 | 8 |
| Average | 7.5 | 27342 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $34 million in ASNA’s case. Liquidia Technologies, Inc. (NASDAQ:LQDA) is the most popular stock in this table. On the other hand The Bank of Princeton (NASDAQ:BPRN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Ascena Retail Group Inc (NASDAQ:ASNA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ASNA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ASNA were disappointed as the stock returned -28.7% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
