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 second quarter of 2021. One of these stocks was AdvanSix Inc. (NYSE:ASIX).
Is AdvanSix Inc. (NYSE:ASIX) a sound investment now? Hedge funds were becoming more confident. The number of long hedge fund positions inched up by 5 lately. AdvanSix Inc. (NYSE:ASIX) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 23. Our calculations also showed that ASIX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind let’s take a gander at the fresh hedge fund action encompassing AdvanSix Inc. (NYSE:ASIX).
Do Hedge Funds Think ASIX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ASIX over the last 23 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.
Among these funds, Royce & Associates held the most valuable stake in AdvanSix Inc. (NYSE:ASIX), which was worth $15.2 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $14.5 million worth of shares. Southpoint Capital Advisors, Arrowstreet Capital, and Two Sigma Advisors 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 Soapstone Capital allocated the biggest weight to AdvanSix Inc. (NYSE:ASIX), around 1.19% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, setting aside 0.22 percent of its 13F equity portfolio to ASIX.
As one would reasonably expect, some big names have jumped into AdvanSix Inc. (NYSE:ASIX) headfirst. Renaissance Technologies, initiated the most valuable position in AdvanSix Inc. (NYSE:ASIX). Renaissance Technologies had $1.5 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Frederick DiSanto’s Ancora Advisors, and Thomas Bailard’s Bailard Inc.
Let’s check out hedge fund activity in other stocks similar to AdvanSix Inc. (NYSE:ASIX). We will take a look at Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), Solar Capital Ltd. (NASDAQ:SLRC), Compugen Ltd. (NASDAQ:CGEN), Gannett Co., Inc. (NYSE:GCI), Vinci Partners Investments Ltd. (NASDAQ:VINP), MRC Global Inc (NYSE:MRC), and QCR Holdings, Inc. (NASDAQ:QCRH). This group of stocks’ market valuations resemble ASIX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPWH | 18 | 212159 | -7 |
| SLRC | 9 | 20926 | -3 |
| CGEN | 11 | 152055 | 0 |
| GCI | 21 | 84764 | 6 |
| VINP | 13 | 79275 | 13 |
| MRC | 15 | 64342 | -3 |
| QCRH | 13 | 74904 | 0 |
| Average | 14.3 | 98346 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $70 million in ASIX’s case. Gannett Co., Inc. (NYSE:GCI) is the most popular stock in this table. On the other hand Solar Capital Ltd. (NASDAQ:SLRC) is the least popular one with only 9 bullish hedge fund positions. AdvanSix Inc. (NYSE:ASIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASIX is 71. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately ASIX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ASIX were disappointed as the stock returned 10.9% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
