Hedge Funds Are Betting On Autoliv Inc. (ALV)

In this article you are going to find out whether hedge funds think Autoliv Inc. (NYSE:ALV) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Autoliv Inc. (NYSE:ALV) a buy, sell, or hold? Money managers were getting more optimistic. The number of bullish hedge fund bets advanced by 3 lately. Autoliv Inc. (NYSE:ALV) was in 23 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 26. Our calculations also showed that ALV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a glance at the recent hedge fund action encompassing Autoliv Inc. (NYSE:ALV).

Do Hedge Funds Think ALV Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALV over the last 24 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in Autoliv Inc. (NYSE:ALV) was held by Cevian Capital, which reported holding $577.6 million worth of stock at the end of June. It was followed by Holocene Advisors with a $70 million position. Other investors bullish on the company included AQR Capital Management, Renaissance Technologies, and LFL Advisers. In terms of the portfolio weights assigned to each position Cevian Capital allocated the biggest weight to Autoliv Inc. (NYSE:ALV), around 75.75% of its 13F portfolio. LFL Advisers is also relatively very bullish on the stock, setting aside 14.28 percent of its 13F equity portfolio to ALV.

As industrywide interest jumped, some big names have jumped into Autoliv Inc. (NYSE:ALV) headfirst. Moore Global Investments, managed by Louis Bacon, initiated the most valuable position in Autoliv Inc. (NYSE:ALV). Moore Global Investments had $15.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Qing Li’s Sciencast Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Autoliv Inc. (NYSE:ALV) but similarly valued. These stocks are Omega Healthcare Investors Inc (NYSE:OHI), US Foods Holding Corp. (NYSE:USFD), Genpact Limited (NYSE:G), TFI International Inc. (NYSE:TFII), Under Armour Inc (NYSE:UA), Huntington Ingalls Industries Inc (NYSE:HII), and Jefferies Financial Group Inc. (NYSE:JEF). This group of stocks’ market values resemble ALV’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $645 million. That figure was $861 million in ALV’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 13 bullish hedge fund positions. Autoliv Inc. (NYSE:ALV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALV is 47.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately ALV wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ALV investors were disappointed as the stock returned -4.9% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.