Out of thousands of stocks that are currently traded on the market, it might be really difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs/PhDs, industry experts, and they are well connected to get tips from insiders. Individual investors can piggyback hedge funds and may be able to benefit from their vast resources. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Avianca Holdings SA (ADR) (NYSE:AVH).
Is Avianca Holdings SA (ADR) (NYSE:AVH) an exceptional stock to buy now? The best stock pickers are taking a bearish view. The number of long hedge fund positions stayed the same at 4 which is a slightly negative development in our experience. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as WCI Communities Inc (NYSE:WCIC), H&E Equipment Services, Inc. (NASDAQ:HEES), and ICF International Inc (NASDAQ:ICFI) to gather more data points.
Now, we’re going to take a peek at the key action encompassing Avianca Holdings SA (ADR) (NYSE:AVH).
Hedge fund activity in Avianca Holdings SA (ADR) (NYSE:AVH)
When looking at the hedgies followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital had the largest position in Avianca Holdings SA (ADR) (NYSE:AVH), worth close to $1.5 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which held a $0.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Michael Hintze’s CQS Cayman LP, and Matthew Hulsizer’s PEAK6 Capital Management.
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.