Is AquaVenture Holdings Limited (NYSE:WAAS) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
AquaVenture Holdings Limited (NYSE:WAAS) has seen a decrease in hedge fund sentiment in recent months. WAAS was in 11 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 12 hedge funds in our database with WAAS holdings at the end of the previous quarter. Our calculations also showed that waas isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the new hedge fund action regarding AquaVenture Holdings Limited (NYSE:WAAS).
Hedge fund activity in AquaVenture Holdings Limited (NYSE:WAAS)
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WAAS over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Ardsley Partners held the most valuable stake in AquaVenture Holdings Limited (NYSE:WAAS), which was worth $10.9 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $6.9 million worth of shares. Moreover, Driehaus Capital, Perella Weinberg Partners, and Private Capital Management were also bullish on AquaVenture Holdings Limited (NYSE:WAAS), allocating a large percentage of their portfolios to this stock.
Since AquaVenture Holdings Limited (NYSE:WAAS) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their full holdings heading into Q3. Interestingly, Thomas E. Claugus’s GMT Capital cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling close to $1.9 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as AquaVenture Holdings Limited (NYSE:WAAS) but similarly valued. These stocks are Bridge Bancorp, Inc. (NASDAQ:BDGE), Enphase Energy Inc (NASDAQ:ENPH), Capitol Investment Corp. IV (NYSE:CIC), and QCR Holdings, Inc. (NASDAQ:QCRH). This group of stocks’ market values are closest to WAAS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BDGE | 9 | 86830 | -2 |
| ENPH | 18 | 93097 | -1 |
| CIC | 14 | 162175 | -1 |
| QCRH | 9 | 54385 | 1 |
| Average | 12.5 | 99122 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $27 million in WAAS’s case. Enphase Energy Inc (NASDAQ:ENPH) is the most popular stock in this table. On the other hand Bridge Bancorp, Inc. (NASDAQ:BDGE) is the least popular one with only 9 bullish hedge fund positions. AquaVenture Holdings Limited (NYSE:WAAS) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WAAS wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); WAAS investors were disappointed as the stock returned -0.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
