A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Avient Corporation (NYSE:AVNT).
Is AVNT a good stock to buy now? Avient Corporation (NYSE:AVNT) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 28. AVNT has seen a decrease in hedge fund interest in recent months. There were 22 hedge funds in our database with AVNT positions at the end of the second quarter. Our calculations also showed that AVNT 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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 we’re going to go over the fresh hedge fund action regarding Avient Corporation (NYSE:AVNT).
Do Hedge Funds Think AVNT Is A Good Stock To Buy Now?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in AVNT a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Avient Corporation (NYSE:AVNT), which was worth $71 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $32.8 million worth of shares. GMT Capital, Scopus Asset Management, and D E Shaw 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 Southport Management allocated the biggest weight to Avient Corporation (NYSE:AVNT), around 6.28% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, designating 2.3 percent of its 13F equity portfolio to AVNT.
Since Avient Corporation (NYSE:AVNT) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there were a few fund managers who were dropping their entire stakes heading into Q4. At the top of the heap, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management sold off the largest stake of all the hedgies followed by Insider Monkey, worth close to $1.7 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $0.6 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Avient Corporation (NYSE:AVNT) but similarly valued. These stocks are Agios Pharmaceuticals Inc (NASDAQ:AGIO), White Mountains Insurance Group Ltd (NYSE:WTM), Merit Medical Systems, Inc. (NASDAQ:MMSI), Advanced Energy Industries, Inc. (NASDAQ:AEIS), Masonite International Corp (NYSE:DOOR), Kennametal Inc. (NYSE:KMT), and APi Group Corporation (NYSE:APG). This group of stocks’ market values match AVNT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $373 million. That figure was $221 million in AVNT’s case. Agios Pharmaceuticals Inc (NASDAQ:AGIO) is the most popular stock in this table. On the other hand Kennametal Inc. (NYSE:KMT) is the least popular one with only 16 bullish hedge fund positions. Avient Corporation (NYSE:AVNT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AVNT is 37.8. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on AVNT as the stock returned 45.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.