Is AVX Corporation (AVX) A Good Stock To Buy?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Is AVX Corporation (NYSE:AVX) an outstanding investment today? Investors who are in the know are taking a bullish view. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings experienced an increase of 3 lately. AVXwas in 17 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with AVX holdings 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 Mentor Graphics Corp (NASDAQ:MENT), Franks International NV (NYSE:FI), and National General Holdings Corp (NASDAQ:NGHC) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Keeping this in mind, we’re going to view the new action regarding AVX Corporation (NYSE:AVX).

What have hedge funds been doing with AVX Corporation (NYSE:AVX)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AVX over the last 5 quarters. So, let’s check out 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, Chuck Royce’s Royce & Associates has the biggest position in AVX Corporation (NYSE:AVX), worth close to $124.7 million, accounting for 0.8% of its total 13F portfolio. On Royce & Associates’s heels is Sensato Capital Management, led by Ernest Chow and Jonathan Howe, holding a $12.3 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Remaining peers that hold long positions consist of Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. We should note that Sensato Capital Management 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.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Hutchin Hill Capital, led by Neil Chriss, initiated the most valuable position in AVX Corporation (NYSE:AVX). According to regulatory filings, the fund had $0.5 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington and Peter Muller’s PDT Partners.

Let’s now take a look at hedge fund activity in other stocks similar to AVX Corporation (NYSE:AVX). We will take a look at Mentor Graphics Corp (NASDAQ:MENT), Franks International NV (NYSE:FI), National General Holdings Corp (NASDAQ:NGHC), and South Jersey Industries Inc (NYSE:SJI). This group of stocks’ market values match AVX’s market value.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $164 million in AVX’s case. Mentor Graphics Corp (NASDAQ:MENT) is the most popular stock in this table. On the other hand South Jersey Industries Inc (NYSE:SJI) is the least popular one with only 8 bullish hedge fund positions. AVX Corporation (NYSE:AVX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MENT might be a better candidate to consider taking a long position in.

Disclosure: none.