We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ambev SA (NYSE:ABEV).
Is Ambev SA (NYSE:ABEV) a healthy stock for your portfolio? Prominent investors are in an optimistic mood. The number of long hedge fund positions improved by 2 recently. Our calculations also showed that ABEV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ABEV was in 18 hedge funds’ portfolios at the end of the third quarter of 2019. There were 16 hedge funds in our database with ABEV positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are perceived as slow, old financial tools of the past. While there are more than 8000 funds trading at present, Our researchers choose to focus on the moguls of this group, approximately 750 funds. It is estimated that this group of investors oversee the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their matchless stock picks, Insider Monkey has spotted numerous investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Ken Heebner of Capital Growth Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the fresh hedge fund action regarding Ambev SA (NYSE:ABEV).
What have hedge funds been doing with Ambev SA (NYSE:ABEV)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ABEV over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ambev SA (NYSE:ABEV) was held by Renaissance Technologies, which reported holding $141.1 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $107.9 million position. Other investors bullish on the company included GLG Partners, Capital Growth Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Ambev SA (NYSE:ABEV), around 2.95% of its 13F portfolio. Dalton Investments is also relatively very bullish on the stock, dishing out 2.13 percent of its 13F equity portfolio to ABEV.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Ambev SA (NYSE:ABEV). Arrowstreet Capital had $1.4 million invested in the company at the end of the quarter. Thomas Bailard’s Bailard Inc also made a $0.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert B. Gillam’s McKinley Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ambev SA (NYSE:ABEV) but similarly valued. We will take a look at The Estee Lauder Companies Inc (NYSE:EL), China Petroleum & Chemical Corporation (NYSE:SNP), Caterpillar Inc. (NYSE:CAT), and Enbridge Inc (NYSE:ENB). This group of stocks’ market values match ABEV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EL | 43 | 1850698 | 7 |
| SNP | 13 | 178003 | 2 |
| CAT | 37 | 2758115 | -8 |
| ENB | 18 | 515524 | -2 |
| Average | 27.75 | 1325585 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1326 million. That figure was $385 million in ABEV’s case. The Estee Lauder Companies Inc (NYSE:EL) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corporation (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. Ambev SA (NYSE:ABEV) 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 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. Unfortunately ABEV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ABEV investors were disappointed as the stock returned -8.9% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
