Do Hedge Funds and Insiders Love Avery Dennison Corp (AVY)?

Avery Dennison Corp (NYSE:AVY) shareholders have witnessed a decrease in hedge fund sentiment in recent months.

If you’d ask most investors, hedge funds are viewed as slow, outdated financial vehicles of years past. While there are over 8000 funds with their doors open today, we at Insider Monkey look at the masters of this club, close to 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total capital, and by paying attention to their best equity investments, we have figured out a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as integral, positive insider trading activity is a second way to break down the marketplace. There are lots of incentives for an executive to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this strategy if shareholders know where to look (learn more here).

Keeping this in mind, it’s important to take a peek at the key action regarding Avery Dennison Corp (NYSE:AVY).

How are hedge funds trading Avery Dennison Corp (NYSE:AVY)?

At year’s end, a total of 8 of the hedge funds we track were bullish in this stock, a change of -38% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully.

Of the funds we track, Cliff Asness’s AQR Capital Management had the most valuable position in Avery Dennison Corp (NYSE:AVY), worth close to $46.3 million, accounting for 0.2% of its total 13F portfolio. On AQR Capital Management’s heels is Jeffrey Vinik of Vinik Asset Management, with a $26.9 million position; 0.8% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include David Harding’s Winton Capital Management, Mariko Gordon’s Daruma Asset Management and D. E. Shaw’s D E Shaw.

Due to the fact that Avery Dennison Corp (NYSE:AVY) has faced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that elected to cut their entire stakes at the end of the year. Intriguingly, Jim Simons’s Renaissance Technologies said goodbye to the largest stake of all the hedgies we key on, comprising an estimated $7.1 million in stock., and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund dropped about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 5 funds at the end of the year.

What do corporate executives and insiders think about Avery Dennison Corp (NYSE:AVY)?

Insider buying is best served when the company in focus has seen transactions within the past six months. Over the last half-year time frame, Avery Dennison Corp (NYSE:AVY) has seen zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Avery Dennison Corp (NYSE:AVY). These stocks are SPX Corporation (NYSE:SPW), Dresser-Rand Group Inc. (NYSE:DRC), IDEX Corporation (NYSE:IEX), Colfax Corp (NYSE:CFX), and Nordson Corporation (NASDAQ:NDSN). This group of stocks belong to the diversified machinery industry and their market caps match AVY’s market cap.