Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Avista Corp (NYSE:AVA) from the perspective of those elite funds.
Avista Corp (NYSE:AVA) was in 7 hedge funds’ portfolios at the end of September. AVA has seen a decrease in support from the world’s most elite money managers of late. There were 8 hedge funds in our database with AVA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Stantec Inc. (USA) (NYSE:STN), The Men’s Wearhouse, Inc. (NYSE:MW), and GrubHub Inc (NYSE:GRUB) to gather more data points.
Follow Avista Corp (NYSE:AVA)
Follow Avista Corp (NYSE:AVA)
In today’s marketplace there are several tools investors put to use to evaluate stocks. A pair of the most useful tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the broader indices by a superb amount (see the details here).
With all of this in mind, we’re going to take a gander at the fresh action encompassing Avista Corp (NYSE:AVA).
How have hedgies been trading Avista Corp (NYSE:AVA)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Avista Corp (NYSE:AVA). Fisher Asset Management has an $27.2 million position in the stock, comprising 0.1% of its 13F portfolio. On Fisher Asset Management’s heels is Israel Englander of Millennium Management, with an $12.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Mario Gabelli’s GAMCO Investors, D. E. Shaw’s D E Shaw and Ken Gray and Steve Walsh’s Bryn Mawr Capital.
Judging by the fact that Avista Corp (NYSE:AVA) has experienced a declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers who sold off their entire stakes in the third quarter. It’s worth mentioning that Jim Simons’ Renaissance Technologies sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $2.6 million in stock. Paul Tudor Jones’ fund, Tudor Investment Corp, also sold off its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Avista Corp (NYSE:AVA) but similarly valued. These stocks are Stantec Inc. (USA) (NYSE:STN), The Men’s Wearhouse, Inc. (NYSE:MW), GrubHub Inc (NYSE:GRUB), and La Quinta Holdings Inc (NYSE:LQ). This group of stocks’ market valuations are closest to AVA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STN | 5 | 12709 | 1 |
| MW | 39 | 776046 | 6 |
| GRUB | 24 | 467061 | -7 |
| LQ | 24 | 318895 | -5 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $394 million, compared to just $45 million in AVA’s case. The Men’s Wearhouse, Inc. (NYSE:MW) is the most popular stock in this table, while Stantec Inc. (USA) (NYSE:STN) is the least popular one with only 5 bullish hedge fund positions. Avista Corp (NYSE:AVA) 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. In this regard MW might be a better candidate to consider a long position.
