Hedge Funds Are Dumping Avis Budget Group Inc. (CAR)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Avis Budget Group Inc. (NASDAQ:CAR).

Avis Budget Group Inc. (NASDAQ:CAR) investors should pay attention to a decrease in hedge fund sentiment in recent months. Avis Budget Group Inc. (NASDAQ:CAR) was in 21 hedge funds’ portfolios at the end of the first 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 Q1 rankings).

In the financial world there are a multitude of methods shareholders have at their disposal to appraise their holdings. Two of the less known methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Larry Robbins of Glenview Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. With all of this in mind let’s go over the new hedge fund action surrounding Avis Budget Group Inc. (NASDAQ:CAR).

Do Hedge Funds Think CAR Is A Good Stock To Buy Now?

At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in CAR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, SRS Investment Management held the most valuable stake in Avis Budget Group Inc. (NASDAQ:CAR), which was worth $1337 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $72.9 million worth of shares. Two Sigma Advisors, Nantahala Capital Management, and Glenview 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 21.05% of its 13F portfolio. Calixto Global Investors is also relatively very bullish on the stock, earmarking 7.89 percent of its 13F equity portfolio to CAR.

Seeing as Avis Budget Group Inc. (NASDAQ:CAR) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few money managers that elected to cut their entire stakes last quarter. Intriguingly, Gabriel Plotkin’s Melvin Capital Management dumped the biggest investment of all the hedgies followed by Insider Monkey, comprising an estimated $59.7 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also cut its stock, about $11.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 7 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Avis Budget Group Inc. (NASDAQ:CAR). These stocks are ASGN Incorporated (NYSE:ASGN), Flowserve Corporation (NYSE:FLS), Cyberark Software Ltd (NASDAQ:CYBR), Valmont Industries, Inc. (NYSE:VMI), Exponent, Inc. (NASDAQ:EXPO), IDACORP Inc (NYSE:IDA), and Amyris Inc (NASDAQ:AMRS). All of these stocks’ market caps are closest to CAR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $1724 million in CAR’s case. Cyberark Software Ltd (NASDAQ:CYBR) is the most popular stock in this table. On the other hand Amyris Inc (NASDAQ:AMRS) is the least popular one with only 14 bullish hedge fund positions. Avis Budget Group Inc. (NASDAQ:CAR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CAR is 31.8. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately CAR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CAR investors were disappointed as the stock returned -1.7% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.

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