Is Avnet, Inc. (AVT) A Good Stock To Buy?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Avnet, Inc. (NASDAQ:AVT).

Is AVT a good stock to buy now? Avnet, Inc. (NASDAQ:AVT) has experienced a decrease in activity from the world’s largest hedge funds in recent months. Avnet, Inc. (NASDAQ:AVT) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that AVT 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. Keeping this in mind let’s analyze the recent hedge fund action encompassing Avnet, Inc. (NASDAQ:AVT).

Alexander Roepers of Atlantic Investment Management

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

At third quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in AVT a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in Avnet, Inc. (NASDAQ:AVT). Pzena Investment Management has a $452 million position in the stock, comprising 1.8% of its 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $32.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Alexander Roepers’s Atlantic Investment Management. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Avnet, Inc. (NASDAQ:AVT), around 10.19% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, setting aside 1.79 percent of its 13F equity portfolio to AVT.

Because Avnet, Inc. (NASDAQ:AVT) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there were a few hedge funds that decided to sell off their full holdings heading into Q4. Interestingly, Matthew Stadelman’s Diamond Hill Capital cut the biggest position of all the hedgies followed by Insider Monkey, worth close to $18.6 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also sold off its stock, about $12.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Avnet, Inc. (NASDAQ:AVT) but similarly valued. We will take a look at Magnite Inc. (NASDAQ:MGNI), Commercial Metals Company (NYSE:CMC), Outfront Media Inc (NYSE:OUT), Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Allogene Therapeutics, Inc. (NASDAQ:ALLO), Cerence Inc. (NASDAQ:CRNC), and Meritage Homes Corp (NYSE:MTH). This group of stocks’ market valuations are closest to AVT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $704 million in AVT’s case. Outfront Media Inc (NYSE:OUT) is the most popular stock in this table. On the other hand Reata Pharmaceuticals, Inc. (NASDAQ:RETA) is the least popular one with only 13 bullish hedge fund positions. Avnet, Inc. (NASDAQ:AVT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVT is 52. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately AVT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AVT were disappointed as the stock returned 5.7% since the end of September (through 12/9) 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.

Suggested Articles:

• 15 Largest Cement Companies in the World
• 15 Biggest VR Companies In The World
• 10 Best Education Stocks To Buy Now

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