Is Avon Products, Inc. (NYSE:AVP) a bargain? The smart money is becoming more confident. The number of long hedge fund bets went up by 2 recently.
In the eyes of most traders, hedge funds are assumed to be worthless, outdated investment vehicles of years past. While there are over 8000 funds trading today, we at Insider Monkey hone in on the aristocrats of this group, about 450 funds. It is widely believed that this group controls most of the smart money’s total asset base, and by monitoring their top equity investments, we have figured out a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 (explore the details and some picks here).
Just as beneficial, optimistic insider trading activity is a second way to break down the marketplace. There are a variety of motivations for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).
Now, it’s important to take a peek at the recent action surrounding Avon Products, Inc. (NYSE:AVP).
How are hedge funds trading Avon Products, Inc. (NYSE:AVP)?
In preparation for this year, a total of 26 of the hedge funds we track held long positions in this stock, a change of 8% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially.
According to our comprehensive database, Donald Yacktman’s Yacktman Asset Management had the largest position in Avon Products, Inc. (NYSE:AVP), worth close to $271 million, comprising 1.6% of its total 13F portfolio. On Yacktman Asset Management’s heels is Jacob Gottlieb of Visium Asset Management, with a $54 million position; 0% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Jamie Zimmerman’s Litespeed Management, and Richard S. Pzena’s Pzena Investment Management.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Avon Products, Inc. (NYSE:AVP) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the most valuable position in Avon Products, Inc. (NYSE:AVP). Adage Capital Management had 12 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $6 million investment in the stock during the quarter. The other funds with brand new AVP positions are Louis Bacon’s Moore Global Investments, John Overdeck and David Siegel’s Two Sigma Advisors, and Cliff Asness’s AQR Capital Management.
What do corporate executives and insiders think about Avon Products, Inc. (NYSE:AVP)?
Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last 180-day time period, Avon Products, Inc. (NYSE:AVP) has seen 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
With the returns exhibited by our time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Avon Products, Inc. (NYSE:AVP) is no exception.
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