Do Hedge Funds Love Telefonica Brasil SA (ADR) (VIV)?

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Telefonica Brasil SA (ADR) (NYSE:VIV) .

Telefonica Brasil SA (ADR) (NYSE:VIV) investors should pay attention to an increase in hedge fund sentiment in recent months. There were 10 hedge funds in our database with VIV positions at the end of the previous quarter. 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 AvalonBay Communities Inc (NYSE:AVB), General Growth Properties Inc (NYSE:GGP), and CBS Corporation (NYSE:CBS) to gather more data points.

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.

Now, we’re going to take a gander at the new action regarding Telefonica Brasil SA (ADR) (NYSE:VIV).

How are hedge funds trading Telefonica Brasil SA (ADR) (NYSE:VIV)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in VIV at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the biggest position in Telefonica Brasil SA (ADR) (NYSE:VIV), worth close to $59.4 million, amounting to 0.4% of its total 13F portfolio. The second most bullish fund manager is Richard Driehaus of Driehaus Capital, with a $32.3 million position; 1.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish include Howard Marks’s Oaktree Capital Management, David Halpert’s Prince Street Capital Management and David Kowitz and Sheldon Kasowitz’s Indus Capital. We should note that Indus Capital is 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.

Consequently, specific money managers were breaking ground themselves. Prince Street Capital Management, led by David Halpert, established the most valuable position in Telefonica Brasil SA (ADR) (NYSE:VIV). Prince Street Capital Management had $23.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are D E Shaw, one of the largest hedge funds in the world, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Telefonica Brasil SA (ADR) (NYSE:VIV) but similarly valued. These stocks are AvalonBay Communities Inc (NYSE:AVB), General Growth Properties Inc (NYSE:GGP), CBS Corporation (NYSE:CBS), and Apache Corporation (NYSE:APA). All of these stocks’ market caps resemble VIV’s market cap.

As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1247 million. That figure was $158 million in VIV’s case. CBS Corporation (NYSE:CBS) is the most popular stock in this table. On the other hand AvalonBay Communities Inc (NYSE:AVB) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Telefonica Brasil SA (ADR) (NYSE:VIV) is even less popular than AVB. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.