Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) based on that data.
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Our calculations also showed that VLRS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Julian Robertson of Tiger Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the key hedge fund action surrounding Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS).
Hedge fund activity in Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS)
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the fourth quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in VLRS a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) was held by Teewinot Capital Advisers, which reported holding $17.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7.8 million position. Other investors bullish on the company included Tiger Management, PAR Capital Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Teewinot Capital Advisers allocated the biggest weight to Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS), around 13.16% of its 13F portfolio. Tiger Management is also relatively very bullish on the stock, earmarking 1.2 percent of its 13F equity portfolio to VLRS.
Since Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few money managers that elected to cut their full holdings last quarter. Intriguingly, Minhua Zhang’s Weld Capital Management dumped the biggest position of all the hedgies tracked by Insider Monkey, valued at close to $0.2 million in stock. Noam Gottesman’s fund, GLG Partners, also sold off its stock, about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) but similarly valued. We will take a look at Boot Barn Holdings Inc (NYSE:BOOT), IES Holdings, Inc. (NASDAQ:IESC), Impinj, Inc. (NASDAQ:PI), and Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA). This group of stocks’ market values are similar to VLRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOOT | 20 | 31760 | -8 |
| IESC | 10 | 237335 | -1 |
| PI | 18 | 137212 | -2 |
| STSA | 5 | 157511 | 0 |
| Average | 13.25 | 140955 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $34 million in VLRS’s case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA) is the least popular one with only 5 bullish hedge fund positions. Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on VLRS as the stock returned 71.1% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
