The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Avantor, Inc. (NYSE:AVTR).
Is Avantor (AVTR) a good stock to buy now? AVTR investors should be aware of an increase in activity from the world’s largest hedge funds of late. Avantor, Inc. (NYSE:AVTR) was in 56 hedge funds’ portfolios at the end of September. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 34 hedge funds in our database with AVTR positions at the end of the second quarter. Our calculations also showed that AVTR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s take a peek at the new hedge fund action encompassing Avantor, Inc. (NYSE:AVTR).
What does smart money think about Avantor, Inc. (NYSE:AVTR)?
At the end of the third quarter, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of 65% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AVTR over the last 21 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Viking Global was the largest shareholder of Avantor, Inc. (NYSE:AVTR), with a stake worth $184.8 million reported as of the end of September. Trailing Viking Global was Palestra Capital Management, which amassed a stake valued at $153.8 million. Third Point, Citadel Investment Group, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Highline Capital Management allocated the biggest weight to Avantor, Inc. (NYSE:AVTR), around 9.08% of its 13F portfolio. Highside Global Management is also relatively very bullish on the stock, setting aside 5.67 percent of its 13F equity portfolio to AVTR.
As industrywide interest jumped, key money managers have been driving this bullishness. Palestra Capital Management, managed by Andrew Immerman and Jeremy Schiffman, created the most valuable position in Avantor, Inc. (NYSE:AVTR). Palestra Capital Management had $153.8 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also made a $112.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert Pohly’s Samlyn Capital, Dmitry Balyasny’s Balyasny Asset Management, and Josh Donfeld and David Rogers’s Castle Hook Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Avantor, Inc. (NYSE:AVTR) but similarly valued. We will take a look at Telefonica Brasil SA (NYSE:VIV), Expedia Group Inc (NASDAQ:EXPE), PPD, Inc. (NASDAQ:PPD), Alliant Energy Corporation (NASDAQ:LNT), Huazhu Group Limited (NASDAQ:HTHT), Brown & Brown, Inc. (NYSE:BRO), and Godaddy Inc (NYSE:GDDY). This group of stocks’ market valuations are similar to AVTR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $1273 million. That figure was $1406 million in AVTR’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 13 bullish hedge fund positions. Avantor, Inc. (NYSE:AVTR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVTR is 82.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on AVTR as the stock returned 20.9% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.