Is Avery Dennison Corp (AVY) Going to Burn These Hedge Funds?

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Avery Dennison Corp (NYSE:AVY) was in 18 hedge funds’ portfolio at the end of March. AVY investors should pay attention to an increase in hedge fund sentiment in recent months. There were 9 hedge funds in our database with AVY positions at the end of the previous quarter.

According to most investors, hedge funds are seen as underperforming, old financial vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, we hone in on the elite of this group, close to 450 funds. It is widely believed that this group has its hands on the lion’s share of the smart money’s total capital, and by paying attention to their best picks, we have figured out a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is a second way to break down the financial markets. Just as you’d expect, there are a variety of motivations for an executive to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this strategy if shareholders know what to do (learn more here).

With all of this in mind, it’s important to take a gander at the recent action regarding Avery Dennison Corp (NYSE:AVY).

How are hedge funds trading Avery Dennison Corp (NYSE:AVY)?

At the end of the first quarter, a total of 18 of the hedge funds we track were long in this stock, a change of 100% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings considerably.

Avery Dennison Corp (NYSE:AVY)When looking at the hedgies we track, Cliff Asness’s AQR Capital Management had the biggest position in Avery Dennison Corp (NYSE:AVY), worth close to $55.4 million, comprising 0.2% of its total 13F portfolio. On AQR Capital Management’s heels is Donald Chiboucis of Columbus Circle Investors, with a $19.7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Jeffrey Vinik’s Vinik Asset Management and David Harding’s Winton Capital Management.

As aggregate interest increased, key hedge funds were breaking ground themselves. Columbus Circle Investors, managed by Donald Chiboucis, created the biggest position in Avery Dennison Corp (NYSE:AVY). Columbus Circle Investors had 19.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $19 million position during the quarter. The other funds with new positions in the stock are Steven Cohen’s SAC Capital Advisors, Joel Greenblatt’s Gotham Asset Management, and Israel Englander’s Millennium Management.

Insider trading activity in Avery Dennison Corp (NYSE:AVY)

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past 180 days. Over the latest 180-day time frame, Avery Dennison Corp (NYSE:AVY) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Avery Dennison Corp (NYSE:AVY). These stocks are SPX Corporation (NYSE:SPW), Dresser-Rand Group Inc. (NYSE:DRC), IDEX Corporation (NYSE:IEX), Colfax Corp (NYSE:CFX), and Nordson Corporation (NASDAQ:NDSN). This group of stocks belong to the diversified machinery industry and their market caps match AVY’s market cap.

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