We are still in an overall bull market and many stocks that smart money investors were piling into 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. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ashford Inc. (NYSE:AINC).
Ashford Inc. (NYSE:AINC) has experienced a decrease in support from the world’s most elite money managers lately. AINC was in 3 hedge funds’ portfolios at the end of the third quarter of 2019. There were 4 hedge funds in our database with AINC holdings at the end of the previous quarter. Our calculations also showed that AINC 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.
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to analyze the new hedge fund action surrounding Ashford Inc. (NYSE:AINC).
What does smart money think about Ashford Inc. (NYSE:AINC)?
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AINC over the last 17 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Ashford Inc. (NYSE:AINC), with a stake worth $0.9 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $0.2 million. Snow Park Capital Partners was 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 Snow Park Capital Partners allocated the biggest weight to Ashford Inc. (NYSE:AINC), around 6.5% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.0022 percent of its 13F equity portfolio to AINC.
Due to the fact that Ashford Inc. (NYSE:AINC) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies that elected to cut their entire stakes last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $0.4 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ashford Inc. (NYSE:AINC) but similarly valued. We will take a look at Navios Maritime Holdings Inc. (NYSE:NM), RealNetworks Inc (NASDAQ:RNWK), Cidara Therapeutics Inc (NASDAQ:CDTX), and Kezar Life Sciences, Inc. (NASDAQ:KZR). This group of stocks’ market caps are similar to AINC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NM | 4 | 5471 | -1 |
| RNWK | 6 | 16916 | -1 |
| CDTX | 6 | 11696 | -3 |
| KZR | 8 | 5585 | -2 |
| Average | 6 | 9917 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in AINC’s case. Kezar Life Sciences, Inc. (NASDAQ:KZR) is the most popular stock in this table. On the other hand Navios Maritime Holdings Inc. (NYSE:NM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Ashford Inc. (NYSE:AINC) is even less popular than NM. Hedge funds dodged a bullet by taking a bearish stance towards AINC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AINC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AINC investors were disappointed as the stock returned -2.8% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.