As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about ACV Auctions Inc. (NASDAQ:ACVA).
Hedge fund interest in ACV Auctions Inc. (NASDAQ:ACVA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ACVA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare ACVA to other stocks including Retail Properties of America Inc (NYSE:RPAI), Cannae Holdings, Inc. (NYSE:CNNE), and United States Cellular Corporation (NYSE:USM) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we’re going to take a look at the latest hedge fund action encompassing ACV Auctions Inc. (NASDAQ:ACVA).
Phillip Gross of Adage Capital
Do Hedge Funds Think ACVA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in ACVA a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ACV Auctions Inc. (NASDAQ:ACVA) was held by Cadian Capital, which reported holding $45.1 million worth of stock at the end of September. It was followed by Atreides Management with a $33.4 million position. Other investors bullish on the company included ThornTree Capital Partners, Adage Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to ACV Auctions Inc. (NASDAQ:ACVA), around 4.64% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, designating 3.87 percent of its 13F equity portfolio to ACVA.
Due to the fact that ACV Auctions Inc. (NASDAQ:ACVA) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Richard Driehaus’s Driehaus Capital sold off the largest investment of all the hedgies watched by Insider Monkey, totaling about $8.3 million in stock, and Frank Fu’s CaaS Capital was right behind this move, as the fund dropped about $2.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to ACV Auctions Inc. (NASDAQ:ACVA). We will take a look at Retail Properties of America Inc (NYSE:RPAI), Cannae Holdings, Inc. (NYSE:CNNE), United States Cellular Corporation (NYSE:USM), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), GrafTech International Ltd. (NYSE:EAF), CVB Financial Corp. (NASDAQ:CVBF), and Sharecare Inc. (NASDAQ:SHCR). This group of stocks’ market caps are closest to ACVA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RPAI | 11 | 61780 | -5 |
| CNNE | 35 | 446118 | 1 |
| USM | 9 | 72313 | 1 |
| KTOS | 15 | 232817 | -3 |
| EAF | 31 | 247108 | -5 |
| CVBF | 18 | 50453 | 5 |
| SHCR | 10 | 60480 | 10 |
| Average | 18.4 | 167296 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $231 million in ACVA’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 9 bullish hedge fund positions. ACV Auctions Inc. (NASDAQ:ACVA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACVA is 56.4. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately ACVA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ACVA were disappointed as the stock returned 5.3% since the end of September (through 12/31) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
