How Do Institutional Investors Trade Asset Growth Anomaly?

We examine how institutional investors trade in relation to the asset growth anomaly—the subsequent underperformance of high asset growth stocks—and whether they exploit this mispricing. Using institutional holdings data, we uncover sharp differences between hedge funds and other institutions. Specifically, hedge funds shift their preference away from high asset growth stocks after asset growth information becomes public, indicating an intentional shift. The subsequent underperformance of high-asset growth stocks is concentrated in stocks where hedge funds reduce exposure, while other institutions show neither similar trading patterns nor return predictability. We also present an implementable strategy: at the end of June, go long on low asset growth stocks that the hedge funds bought and short high-asset growth stocks that they sold. This portfolio generates an average monthly return of 1.19%, nearly doubling the 0.62% achieved by a standard single-sort asset growth strategy. Overall, the evidence highlights hedge funds’ distinct role in processing asset growth information.

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Publication Details

Journal
The Journal of Investing
Published
2026-06-18
DOI
https://doi.org/10.3905/joi.2026.008
Primary Topic
Financial Markets and Investment Strategies
Type
article
Field-Weighted Citation Impact
0.00
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article

How Do Institutional Investors Trade Asset Growth Anomaly?

Umut Celiker, Gokhan Sonaer
The Journal of Investing
Financial Markets and Investment Strategies
article

How Do Institutional Investors Trade Asset Growth Anomaly?

Umut Celiker, Gokhan Sonaer
article en

Abstract

We examine how institutional investors trade in relation to the asset growth anomaly—the subsequent underperformance of high asset growth stocks—and whether they exploit this mispricing. Using institutional holdings data, we uncover sharp differences between hedge funds and other institutions. Specifically, hedge funds shift their preference away from high asset growth stocks after asset growth information becomes public, indicating an intentional shift. The subsequent underperformance of high-asset growth stocks is concentrated in stocks where hedge funds reduce exposure, while other institutions show neither similar trading patterns nor return predictability. We also present an implementable strategy: at the end of June, go long on low asset growth stocks that the hedge funds bought and short high-asset growth stocks that they sold. This portfolio generates an average monthly return of 1.19%, nearly doubling the 0.62% achieved by a standard single-sort asset growth strategy. Overall, the evidence highlights hedge funds’ distinct role in processing asset growth information.

The Journal of Investing
Cleveland State University (US), Duquesne University (US)
Openalex Percentile: Top 4%
Financial Markets and Investment Strategies
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