In this article you are going to find out whether hedge funds think Avis Budget Group Inc. (NASDAQ:CAR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Avis Budget Group Inc. (NASDAQ:CAR) a buy, sell, or hold? Investors who are in the know were in a bullish mood. The number of bullish hedge fund bets went up by 6 lately. Avis Budget Group Inc. (NASDAQ:CAR) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that CAR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Heebner of Capital Growth Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the recent hedge fund action encompassing Avis Budget Group Inc. (NASDAQ:CAR).
Do Hedge Funds Think CAR Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in CAR a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, SRS Investment Management was the largest shareholder of Avis Budget Group Inc. (NASDAQ:CAR), with a stake worth $1435.6 million reported as of the end of June. Trailing SRS Investment Management was Two Sigma Advisors, which amassed a stake valued at $72.6 million. Arrowstreet Capital, Citadel Investment Group, and Intrinsic Edge 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 SRS Investment Management allocated the biggest weight to Avis Budget Group Inc. (NASDAQ:CAR), around 21.28% of its 13F portfolio. Calixto Global Investors is also relatively very bullish on the stock, earmarking 4.62 percent of its 13F equity portfolio to CAR.
Consequently, key money managers have jumped into Avis Budget Group Inc. (NASDAQ:CAR) headfirst. Intrinsic Edge Capital, managed by Mark Coe, created the largest position in Avis Budget Group Inc. (NASDAQ:CAR). Intrinsic Edge Capital had $16.4 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $12.6 million investment in the stock during the quarter. The following funds were also among the new CAR investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Michael Gelband’s ExodusPoint Capital, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Avis Budget Group Inc. (NASDAQ:CAR) but similarly valued. These stocks are Open Lending Corporation (NASDAQ:LPRO), Regal Beloit Corporation (NYSE:RBC), MAXIMUS, Inc. (NYSE:MMS), Pilgrim’s Pride Corporation (NASDAQ:PPC), Diversey Holdings, Ltd. (NASDAQ:DSEY), Crane Co. (NYSE:CR), and KBR, Inc. (NYSE:KBR). This group of stocks’ market values are similar to CAR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPRO | 24 | 433663 | -9 |
| RBC | 31 | 391844 | 1 |
| MMS | 26 | 128750 | 8 |
| PPC | 18 | 88832 | 2 |
| DSEY | 12 | 171364 | -9 |
| CR | 25 | 303503 | 8 |
| KBR | 36 | 1046690 | 5 |
| Average | 24.6 | 366378 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $1710 million in CAR’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Diversey Holdings, Ltd. (NASDAQ:DSEY) is the least popular one with only 12 bullish hedge fund positions. Avis Budget Group Inc. (NASDAQ:CAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CAR is 59.7. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on CAR as the stock returned 93.8% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Avis Budget Group Inc. (NASDAQ:CAR)
Follow Avis Budget Group Inc. (NASDAQ:CAR)
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Disclosure: None. This article was originally published at Insider Monkey.
