Is Avery Dennison Corporation (AVY) Going to Burn These Hedge Funds?

In this article we will analyze whether Avery Dennison Corporation (NYSE:AVY) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Avery Dennison Corporation (NYSE:AVY) has seen a decrease in activity from the world’s largest hedge funds of late. Avery Dennison Corporation (NYSE:AVY) was in 29 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. Our calculations also showed that AVY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind let’s take a glance at the fresh hedge fund action encompassing Avery Dennison Corporation (NYSE:AVY).

Mark Kingdon of Kingdon Capital

Do Hedge Funds Think AVY Is A Good Stock To Buy Now?

At the end of September, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in AVY a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, Select Equity Group held the most valuable stake in Avery Dennison Corporation (NYSE:AVY), which was worth $657.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $73.1 million worth of shares. Scopus Asset Management, Renaissance Technologies, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Aubrey Capital Management allocated the biggest weight to Avery Dennison Corporation (NYSE:AVY), around 2.22% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, designating 2.21 percent of its 13F equity portfolio to AVY.

Because Avery Dennison Corporation (NYSE:AVY) has witnessed falling interest from the smart money, it’s safe to say that there were a few money managers that elected to cut their entire stakes in the third quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management sold off the biggest stake of the 750 funds watched by Insider Monkey, valued at about $16.3 million in stock, and Andrew Byington’s Appian Way Asset Management was right behind this move, as the fund dumped about $14.5 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Avery Dennison Corporation (NYSE:AVY) but similarly valued. We will take a look at Tata Motors Limited (NYSE:TTM), Diamondback Energy Inc (NASDAQ:FANG), NVR, Inc. (NYSE:NVR), Bentley Systems, Incorporated (NASDAQ:BSY), Entegris Inc (NASDAQ:ENTG), Akamai Technologies, Inc. (NASDAQ:AKAM), and PagSeguro Digital Ltd. (NYSE:PAGS). This group of stocks’ market valuations are similar to AVY’s market valuation.

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As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $828 million. That figure was $932 million in AVY’s case. Diamondback Energy Inc (NASDAQ:FANG) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 10 bullish hedge fund positions. Avery Dennison Corporation (NYSE:AVY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AVY is 48.8. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately AVY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AVY investors were disappointed as the stock returned -0.7% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.