Advantage Oil & Gas Ltd (USA) (AAV): Are Hedge Funds Right About This Stock?

At Insider Monkey we follow around 730 of the best-performing investors and even though many of them lost money in the last several months, the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Advantage Oil & Gas Ltd (USA) (NYSE:AAV) was in 6 hedge funds’ portfolios at the end of the third quarter of 2015. AAV has seen a decrease in hedge fund sentiment lately. There were 8 hedge funds in our database with AAV positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TPG Specialty Lending Inc (NYSE:TSLX), Continental Building Products Inc (NYSE:CBPX), and Virtus Investment Partners Inc (NASDAQ:VRTS) to gather more data points.

Keeping this in mind, let’s take a glance at the new action encompassing Advantage Oil & Gas Ltd (USA) (NYSE:AAV).

How are hedge funds trading Advantage Oil & Gas Ltd (USA) (NYSE:AAV)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Steve Cohen’s Point72 Asset Management has the largest position in Advantage Oil & Gas Ltd (USA) (NYSE:AAV), worth close to $4.1 million, corresponding to less than 0.1% of its total 13F portfolio. The second largest stake is held by Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $2 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Eric Sprott’s Sprott Asset Management, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.

Seeing as Advantage Oil & Gas Ltd (USA) (NYSE:AAV) has experienced bearish sentiment from hedge fund managers, logic holds that there were a few fund managers that elected to cut their positions entirely in the third quarter. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $2.5 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund cut about $1.6 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Advantage Oil & Gas Ltd (USA) (NYSE:AAV). We will take a look at TPG Specialty Lending Inc (NYSE:TSLX), Continental Building Products Inc (NYSE:CBPX), Virtus Investment Partners Inc (NASDAQ:VRTS), and Global Eagle Acquisition Corp (NASDAQ:ENT). This group of stocks’ market values match AAV’s market value.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $7 million in AAV’s case. Continental Building Products Inc (NYSE:CBPX) is the most popular stock in this table. On the other hand TPG Specialty Lending Inc (NYSE:TSLX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Advantage Oil & Gas Ltd (USA) (NYSE:AAV) is as less popular as TSLX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.