Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Avianca Holdings SA (NYSE:AVH), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Avianca Holdings SA (NYSE:AVH) investors should be aware of a decrease in hedge fund interest of late. AVH was in 3 hedge funds’ portfolios at the end of the third quarter of 2019. There were 4 hedge funds in our database with AVH holdings at the end of the previous quarter. Our calculations also showed that AVH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of tools stock traders put to use to size up publicly traded companies. A duo of the less known tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best fund managers can trounce the market by a significant margin (see the details here).
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a gander at the fresh hedge fund action encompassing Avianca Holdings SA (NYSE:AVH).
Hedge fund activity in Avianca Holdings SA (NYSE:AVH)
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in AVH 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.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in Avianca Holdings SA (NYSE:AVH), worth close to $5.8 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Ken Griffin of Citadel Investment Group, with a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Avianca Holdings SA (NYSE:AVH), around 0.0049% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, earmarking 0.0005 percent of its 13F equity portfolio to AVH.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified AVH as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks similar to Avianca Holdings SA (NYSE:AVH). These stocks are DryShips Inc. (NASDAQ:DRYS), Cowen Inc. (NASDAQ:COWN), Hawkins, Inc. (NASDAQ:HWKN), and Lannett Company, Inc. (NYSE:LCI). This group of stocks’ market caps are closest to AVH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DRYS | 7 | 19825 | 5 |
| COWN | 19 | 87839 | 0 |
| HWKN | 8 | 11461 | 1 |
| LCI | 14 | 83065 | 2 |
| Average | 12 | 50548 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $7 million in AVH’s case. Cowen Inc. (NASDAQ:COWN) is the most popular stock in this table. On the other hand DryShips Inc. (NASDAQ:DRYS) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Avianca Holdings SA (NYSE:AVH) is even less popular than DRYS. Hedge funds clearly dropped the ball on AVH as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on AVH as the stock returned 12.1% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
