The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Avanos Medical (NYSE:AVNS) based on those filings.
Avanos Medical (NYSE:AVNS) investors should pay attention to an increase in support from the world’s most elite money managers of late. Our calculations also showed that AVNS 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.
According to most market participants, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, Our researchers hone in on the crème de la crème of this club, approximately 850 funds. Most estimates calculate that this group of people administer bulk of the smart money’s total asset base, and by observing their matchless stock picks, Insider Monkey has deciphered many investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Phill Gross of Adage Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. 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. With all of this in mind let’s analyze the new hedge fund action encompassing Avanos Medical (NYSE:AVNS).
Hedge fund activity in Avanos Medical (NYSE:AVNS)
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AVNS over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RGM Capital was the largest shareholder of Avanos Medical (NYSE:AVNS), with a stake worth $37.9 million reported as of the end of September. Trailing RGM Capital was Cove Street Capital, which amassed a stake valued at $21.9 million. D E Shaw, Millennium Management, and Point72 Asset Management 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 Cove Street Capital allocated the biggest weight to Avanos Medical (NYSE:AVNS), around 4.48% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, setting aside 2.98 percent of its 13F equity portfolio to AVNS.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most valuable position in Avanos Medical (NYSE:AVNS). Millennium Management had $6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $2.9 million investment in the stock during the quarter. The following funds were also among the new AVNS investors: Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Eisner’s Engineers Gate Manager.
Let’s now take a look at hedge fund activity in other stocks similar to Avanos Medical (NYSE:AVNS). These stocks are Core-Mark Holding Company, Inc. (NASDAQ:CORE), Innovative Industrial Properties, Inc. (NYSE:IIPR), Revolution Medicines, Inc. (NASDAQ:RVMD), and Lions Gate Entertainment Corporation (NYSE:LGF-A). All of these stocks’ market caps are closest to AVNS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CORE | 19 | 24155 | 3 |
| IIPR | 14 | 99011 | -2 |
| RVMD | 20 | 223473 | 20 |
| LGF-A | 23 | 207237 | 4 |
| Average | 19 | 138469 | 6.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $83 million in AVNS’s case. Lions Gate Entertainment Corporation (NYSE:LGF-A) is the most popular stock in this table. On the other hand Innovative Industrial Properties, Inc. (NYSE:IIPR) is the least popular one with only 14 bullish hedge fund positions. Avanos Medical (NYSE:AVNS) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately AVNS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AVNS investors were disappointed as the stock returned 6.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
