Allison Transmission Holdings Inc (ALSN): Are Hedge Funds Right About This Stock?

Is Allison Transmission Holdings Inc (NYSE:ALSN) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Is Allison Transmission Holdings Inc (NYSE:ALSN) the right investment to pursue these days? Money managers are in a bullish mood. The number of long hedge fund bets inched up by 4 recently. At the end of this article we will also compare ALSN to other stocks including Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR), PacWest Bancorp (NASDAQ:PACW), and Burlington Stores Inc (NYSE:BURL) to get a better sense of its popularity.

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Now, let’s take a look at the key action encompassing Allison Transmission Holdings Inc (NYSE:ALSN).

Hedge fund activity in Allison Transmission Holdings Inc (NYSE:ALSN)

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 12% from the second quarter of 2016. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Ubben of ValueAct Capital holds the biggest position in Allison Transmission Holdings Inc (NYSE:ALSN). The fund has a $548.5 million position in the stock, comprising 4.8% of its 13F portfolio. Sitting at the No. 2 spot is Ashe Capital, managed by William Crowley, William Harker, and Stephen Blass, which holds a $287.7 million position; the fund has 30.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise James A. Star’s Longview Asset Management, Lou Simpson’s SQ Advisors and D E Shaw which is one of the biggest hedge funds in the world .

Now, some big names were breaking ground themselves. Valinor Management LLC, managed by David Gallo, created the biggest position in Allison Transmission Holdings Inc (NYSE:ALSN). The fund reportedly had $95.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $16 million position during the quarter. The following funds were also among the new ALSN investors: Ken Griffin’s Citadel Investment Group, Glenn Russell Dubin’s Highbridge Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Allison Transmission Holdings Inc (NYSE:ALSN) but similarly valued. We will take a look at Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR), PacWest Bancorp (NASDAQ:PACW), Burlington Stores Inc (NYSE:BURL), and Nordson Corporation (NASDAQ:NDSN). This group of stocks’ market values resemble ALSN’s market value.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $1.9 billion in ALSN’s case. Burlington Stores Inc (NYSE:BURL) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Allison Transmission Holdings Inc (NYSE:ALSN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.