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Is Avianca Holdings SA (ADR) (AVH) A Good Stock To Buy?

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Avianca Holdings SA (ADR) (NYSE:AVH) but similarly valued. These stocks are WCI Communities Inc (NYSE:WCIC), H&E Equipment Services, Inc. (NASDAQ:HEES), ICF International Inc (NASDAQ:ICFI), and Chart Industries, Inc. (NASDAQ:GTLS). This group of stocks’ market valuations are similar to AVH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WCIC 22 165193 8
HEES 11 26047 -6
ICFI 14 70187 1
GTLS 14 48613 -7

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $78 million.That figure was $3 millions in AVH’s case. WCI Communities Inc (NYSE:WCIC) is the most popular stock in this table. On the other hand H&E Equipment Services, Inc. (NASDAQ:HEES) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Avianca Holdings SA (ADR) (NYSE:AVH) is even less popular than HEES. Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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