The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Avis Budget Group Inc. (NASDAQ:CAR) from the perspective of those elite funds.
Avis Budget Group Inc. (NASDAQ:CAR) investors should be aware of a decrease in support from the world’s most elite money managers lately. At the end of this article we will also compare CAR to other stocks including Education Realty Trust, Inc. (NYSE:EDR), NorthWestern Corp (NYSE:NWE), and American National Insurance Company (NASDAQ:ANAT) to get a better sense of its popularity.
Follow Avis Budget Group Inc. (NASDAQ:CAR)
Follow Avis Budget Group Inc. (NASDAQ:CAR)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, we’re going to take a look at the latest action regarding Avis Budget Group Inc. (NASDAQ:CAR).
What does the smart money think about Avis Budget Group Inc. (NASDAQ:CAR)?
During the third quarter, the number of hedge funds tracked by Insider Monkey long Avis Budget Group Inc. (NASDAQ:CAR) declined by three to 30. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Karthik Sarma’s SRS Investment Management holds the most valuable position in Avis Budget Group Inc. (NASDAQ:CAR). SRS Investment Management has a $290.8 million position in the stock, comprising 7.7% of its 13F portfolio. Sitting at the No. 2 spot is Glenview Capital, led by Larry Robbins, holding a $283.9 million position; 2% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Ric Dillon’s Diamond Hill Capital, Jason Karp’s Tourbillon Capital Partners and Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors.
Judging by the fact that Avis Budget Group Inc. (NASDAQ:CAR) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their entire stakes during the third quarter. It’s worth mentioning that Seth Klarman’s Baupost Group said goodbye to the biggest position of all the hedgies watched by Insider Monkey, worth about $57.6 million in stock, and Brett Barakett’s Tremblant Capital was right behind this move, as the fund dumped about $51.4 million worth of the company’s shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Avis Budget Group Inc. (NASDAQ:CAR) but similarly valued. We will take a look at Education Realty Trust, Inc. (NYSE:EDR), NorthWestern Corp (NYSE:NWE), American National Insurance Company (NASDAQ:ANAT), and Popular Inc (NASDAQ:BPOP). All of these stocks’ market caps are closest to CAR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EDR | 11 | 140116 | -3 |
| NWE | 6 | 37152 | -2 |
| ANAT | 13 | 30379 | 3 |
| BPOP | 30 | 586643 | 3 |
As you can see these stocks had an average of 15 investors holding shares and the average amount invested in these stocks was $199 million, significantly lower than the $1.08 billion figure in CAR’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand NorthWestern Corp (NYSE:NWE) is the least popular one with only 6 bullish hedge fund positions. Avis Budget Group Inc. (NASDAQ:CAR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Popular Inc (NASDAQ:BPOP) might be a better candidate to consider a long position.
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Disclosure: None
