Where Do Hedge Funds Stand On Abercrombie & Fitch Co. (ANF)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Abercrombie & Fitch Co. (NYSE:ANF) to find out whether there were any major changes in hedge funds’ views.

Abercrombie & Fitch Co. (NYSE:ANF) investors should pay attention to a decrease in enthusiasm from smart money of late. Abercrombie & Fitch Co. (NYSE:ANF) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. There were 32 hedge funds in our database with ANF holdings at the end of June. Our calculations also showed that ANF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to analyze the recent hedge fund action surrounding Abercrombie & Fitch Co. (NYSE:ANF).

Dmitry Balyasny of Balyasny Asset Management

Do Hedge Funds Think ANF Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the second quarter of 2021. By comparison, 27 hedge funds held shares or bullish call options in ANF a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Paradice Investment Management held the most valuable stake in Abercrombie & Fitch Co. (NYSE:ANF), which was worth $106.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $77.9 million worth of shares. Melvin Capital Management, Citadel Investment Group, and Divisar Capital 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 Divisar Capital allocated the biggest weight to Abercrombie & Fitch Co. (NYSE:ANF), around 6.96% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, earmarking 4.81 percent of its 13F equity portfolio to ANF.

Judging by the fact that Abercrombie & Fitch Co. (NYSE:ANF) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that decided to sell off their full holdings heading into Q4. Intriguingly, Alexander Mitchell’s Scopus Asset Management sold off the largest position of all the hedgies watched by Insider Monkey, comprising about $52.2 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $9.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Abercrombie & Fitch Co. (NYSE:ANF). These stocks are Patria Investments Limited (NASDAQ:PAX), TreeHouse Foods Inc. (NYSE:THS), N-able Inc. (NYSE:NABL), Pactiv Evergreen Inc. (NASDAQ:PTVE), American Well Corporation (NYSE:AMWL), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), and Arqit Quantum Inc. (NASDAQ:ARQQ). This group of stocks’ market values resemble ANF’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $416 million in ANF’s case. American Well Corporation (NYSE:AMWL) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Abercrombie & Fitch Co. (NYSE:ANF) is more popular among hedge funds. Our overall hedge fund sentiment score for ANF is 81.4. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately ANF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ANF were disappointed as the stock returned -4.3% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.