Is Controladora Vuela Co Avcn SA CV (ADR) (VLRS) Going to Burn These Hedge Funds?

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Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS).

Is Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS) worth your attention right now? The best stock pickers are turning bullish. The number of bullish hedge fund bets strengthened by 3 in recent months. VLRS was in 14 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with VLRS positions at the end of the previous quarter. At the end of this article we will also compare VLRS to other stocks including Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), Finisar Corporation (NASDAQ:FNSR), and KBR, Inc. (NYSE:KBR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Hedge fund activity in Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS)

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a 27% gain from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards VLRS over the last 5 quarters, which was largely flat until the latest quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Discovery Capital Management, led by Rob Citrone, holds the biggest position in Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS). Discovery Capital Management has a $74.9 million position in the stock, comprising 1.6% of its 13F portfolio. On Discovery Capital Management’s heels is Paul Reeder and Edward Shapiro of PAR Capital Management, with a $56.3 million position. Other members of the smart money that hold long positions contain Jim Simons’ Renaissance Technologies, Robert B. Gillam’s McKinley Capital Management, and Michael Moriarty’s Teewinot Capital Advisers. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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