Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Have Never Been This Bullish On Avaya Holdings Corp. (AVYA)

Is Avaya Holdings Corp. (NYSE:AVYA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Avaya Holdings Corp. (NYSE:AVYA) the right investment to pursue these days? Money managers are becoming hopeful. The number of long hedge fund bets inched up by 2 lately. Our calculations also showed that avya isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Anchorage Capital 2014 Q2 Investor Letter

We’re going to check out the new hedge fund action encompassing Avaya Holdings Corp. (NYSE:AVYA).

What have hedge funds been doing with Avaya Holdings Corp. (NYSE:AVYA)?

At Q4’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the second quarter of 2018. On the other hand, there were a total of 35 hedge funds with a bullish position in AVYA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

No of Hedge Funds with AVYA Positions

The largest stake in Avaya Holdings Corp. (NYSE:AVYA) was held by Highland Capital Management, which reported holding $50.9 million worth of stock at the end of December. It was followed by Anchorage Advisors with a $48.9 million position. Other investors bullish on the company included Rubric Capital Management, Knighthead Capital, and Point72 Asset Management.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. HPS Investment Partners, managed by Scott Kapnick, established the largest position in Avaya Holdings Corp. (NYSE:AVYA). HPS Investment Partners had $13.5 million invested in the company at the end of the quarter. Vasan Kesavan, Srikumar Kesavan and Sandeep Ramesh’s Meghalaya Partners also made a $5.7 million investment in the stock during the quarter. The other funds with brand new AVYA positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Cliff Asness’s AQR Capital Management, and Jay Petschek and Steven Major’s Corsair Capital Management.

Let’s go over hedge fund activity in other stocks similar to Avaya Holdings Corp. (NYSE:AVYA). We will take a look at Sibanye Gold Ltd (NYSE:SBGL), Forward Air Corporation (NASDAQ:FWRD), Universal Forest Products, Inc. (NASDAQ:UFPI), and Dillard’s, Inc. (NYSE:DDS). This group of stocks’ market values match AVYA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SBGL 12 37299 0
FWRD 11 69939 -4
UFPI 16 43942 -2
DDS 14 102725 -2
Average 13.25 63476 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $354 million in AVYA’s case. Universal Forest Products, Inc. (NASDAQ:UFPI) is the most popular stock in this table. On the other hand Forward Air Corporation (NASDAQ:FWRD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Avaya Holdings Corp. (NYSE:AVYA) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on AVYA as the stock returned 32.6% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.