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Avnet, Inc. (NYSE:AVT): Hedge Funds and Insiders Are Bearish, What Should You Do?

Avnet, Inc. (NYSE:AVT) was in 19 hedge funds’ portfolio at the end of December. AVT investors should pay attention to a decrease in hedge fund interest in recent months. There were 24 hedge funds in our database with AVT positions at the end of the previous quarter.

To most market participants, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are over 8000 funds trading at the moment, we look at the elite of this club, close to 450 funds. It is widely believed that this group oversees most of all hedge funds’ total asset base, and by watching their top equity investments, we have revealed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

AQR CAPITAL MANAGEMENTJust as beneficial, bullish insider trading sentiment is a second way to parse down the investments you’re interested in. There are many incentives for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this method if “monkeys” understand where to look (learn more here).

Keeping this in mind, we’re going to take a look at the key action encompassing Avnet, Inc. (NYSE:AVT).

How have hedgies been trading Avnet, Inc. (NYSE:AVT)?

Heading into 2013, a total of 19 of the hedge funds we track held long positions in this stock, a change of -21% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings considerably.

When looking at the hedgies we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Avnet, Inc. (NYSE:AVT). Arrowstreet Capital has a $154 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Thomas E. Claugus of GMT Capital, with a $96 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Richard S. Pzena’s Pzena Investment Management, Cliff Asness’s AQR Capital Management and Clint Carlson’s Carlson Capital.

Due to the fact that Avnet, Inc. (NYSE:AVT) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that elected to cut their full holdings last quarter. Intriguingly, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC sold off the biggest stake of the 450+ funds we track, totaling an estimated $138 million in stock.. Malcolm Fairbairn’s fund, Ascend Capital, also sold off its stock, about $7 million worth. These moves are interesting, as aggregate hedge fund interest fell by 5 funds last quarter.

What have insiders been doing with Avnet, Inc. (NYSE:AVT)?

Bullish insider trading is best served when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time period, Avnet, Inc. (NYSE:AVT) has seen zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned time-tested strategies, everyday investors must always watch hedge fund and insider trading activity, and Avnet, Inc. (NYSE:AVT) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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