Is Avaya Holdings Corp. (AVYA) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 867 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2021. What do these smart investors think about Avaya Holdings Corp. (NYSE:AVYA)?

Avaya Holdings Corp. (NYSE:AVYA) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. Avaya Holdings Corp. (NYSE:AVYA) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 42. There were 37 hedge funds in our database with AVYA positions at the end of the second quarter. Our calculations also showed that AVYA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s check out the fresh hedge fund action regarding Avaya Holdings Corp. (NYSE:AVYA).

Joel Greenblatt Gotham Asset Management

Joel Greenblatt of Gotham Asset Management

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

At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -32% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards AVYA over the last 25 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.

According to Insider Monkey’s hedge fund database, Panayotis Takis Sparaggis’s Alkeon Capital Management has the number one position in Avaya Holdings Corp. (NYSE:AVYA), worth close to $110.7 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Melqart Asset Management, led by Michel Massoud, holding a $56 million position; 2.7% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass Jeremy Carton and Gilbert Li’s Alta Fundamental Advisers, Mark Coe’s Intrinsic Edge Capital and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Alta Fundamental Advisers allocated the biggest weight to Avaya Holdings Corp. (NYSE:AVYA), around 11.07% of its 13F portfolio. Provenire Capital is also relatively very bullish on the stock, designating 6.57 percent of its 13F equity portfolio to AVYA.

Judging by the fact that Avaya Holdings Corp. (NYSE:AVYA) has experienced declining sentiment from hedge fund managers, it’s easy to see that there were a few fund managers that decided to sell off their positions entirely heading into Q4. It’s worth mentioning that Richard Driehaus’s Driehaus Capital dropped the largest investment of all the hedgies watched by Insider Monkey, worth an estimated $32.6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $21.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 12 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Avaya Holdings Corp. (NYSE:AVYA) but similarly valued. We will take a look at Alamo Group, Inc. (NYSE:ALG), Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), Industrial Logistics Properties Trust (NASDAQ:ILPT), Lindsay Corporation (NYSE:LNN), PAR Technology Corporation (NYSE:PAR), Horace Mann Educators Corporation (NYSE:HMN), and PROCEPT BioRobotics Corporation (NASDAQ:PRCT). This group of stocks’ market valuations are closest to AVYA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALG 7 200059 -3
HYFM 11 51190 -4
ILPT 11 19800 5
LNN 16 204475 2
PAR 23 465807 6
HMN 10 24626 -5
PRCT 21 314055 21
Average 14.1 182859 3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $271 million in AVYA’s case. PAR Technology Corporation (NYSE:PAR) is the most popular stock in this table. On the other hand Alamo Group, Inc. (NYSE:ALG) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Avaya Holdings Corp. (NYSE:AVYA) is more popular among hedge funds. Our overall hedge fund sentiment score for AVYA is 60.9. 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 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately AVYA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AVYA were disappointed as the stock returned 2.3% since the end of the third quarter (through 12/9) 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 since 2019.

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