Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
AVG Technologies NV (NYSE:AVG) shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 14 hedge funds in our database with AVG positions at the end of September. 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 M.D.C. Holdings, Inc. (NYSE:MDC), Oclaro, Inc. (NASDAQ:OCLR), and Cubic Corporation (NYSE:CUB) to gather more data points.
Follow Avg Technologies N.v. (NYSE:AVG)
Follow Avg Technologies N.v. (NYSE:AVG)
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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With all of this in mind, we’re going to view the latest action surrounding AVG Technologies NV (NYSE:AVG).
What have hedge funds been doing with AVG Technologies NV (NYSE:AVG)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 22% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards AVG over the last 5 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D. E. Shaw’s D E Shaw holds the largest position in AVG Technologies NV (NYSE:AVG). D E Shaw has a $20.7 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, founded by Jim Simons, holding a $8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Douglas T. Granat’s Trigran Investments, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and Matthew Tewksbury’s Stevens Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. Interestingly, Sheetal Duggal’s Thrax Management cut the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $9.3 million in call options. Chuck Royce’s mutual fund, Royce & Associates, also dumped its stock, about $8 million worth.
Let’s now review hedge fund activity in other stocks similar to AVG Technologies NV (NYSE:AVG). We will take a look at M.D.C. Holdings, Inc. (NYSE:MDC), Oclaro, Inc. (NASDAQ:OCLR), Cubic Corporation (NYSE:CUB), and Franklin Street Properties Corp. (NYSEAMEX:FSP). This group of stocks’ market caps are closest to AVG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDC | 11 | 62421 | -1 |
| OCLR | 41 | 247621 | 12 |
| CUB | 17 | 113374 | 2 |
| FSP | 9 | 66144 | -1 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $64 million in AVG’s case. Oclaro, Inc. (NASDAQ:OCLR) is the most popular stock in this table. On the other hand Franklin Street Properties Corp. (NYSEAMEX:FSP) is the least popular one with only 9 bullish hedge fund positions. AVG Technologies NV (NYSE:AVG) 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 OCLR might be a better candidate to consider taking a long position in.
Disclosure: None
