“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) a first-rate investment now? Prominent investors are in a bearish mood. The number of long hedge fund bets shrunk by 3 in recent months. Our calculations also showed that VLRS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are several signals stock traders employ to grade stocks. A couple of the less known signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best money managers can trounce the S&P 500 by a superb amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the recent hedge fund action encompassing Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS).
Hedge fund activity in Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS)
Heading into the third quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the first quarter of 2019. On the other hand, there were a total of 8 hedge funds with a bullish position in VLRS a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) was held by Teewinot Capital Advisers, which reported holding $44.2 million worth of stock at the end of March. It was followed by Tiger Management with a $13.8 million position. Other investors bullish on the company included Renaissance Technologies, PAR Capital Management, and Millennium Management.
Judging by the fact that Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies that elected to cut their entire stakes heading into Q3. Interestingly, Michael R. Weisberg’s Crestwood Capital Management dropped the largest investment of the 750 funds watched by Insider Monkey, worth close to $1 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund dropped about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS). We will take a look at Ballard Power Systems Inc. (NASDAQ:BLDP), Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA), Coeur Mining, Inc. (NYSE:CDE), and Valhi, Inc. (NYSE:VHI). All of these stocks’ market caps are similar to VLRS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BLDP | 4 | 784 | 1 |
| LTRPA | 21 | 255525 | -2 |
| CDE | 10 | 29389 | -1 |
| VHI | 6 | 8001 | 0 |
| Average | 10.25 | 73425 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $106 million in VLRS’s case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand Ballard Power Systems Inc. (NASDAQ:BLDP) is the least popular one with only 4 bullish hedge fund positions. Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on VLRS as the stock returned 6.7% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
