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Is Controladora Vuela Co Avcn SA CV (VLRS) A Good Stock To Buy?

At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Is Controladora Vuela Co Avcn SA CV (NYSE:VLRS) a great investment right now? The smart money is in a bullish mood. The number of bullish hedge fund bets improved by 2 recently. Our calculations also showed that VLRS isn’t among the 30 most popular stocks among hedge funds. VLRS was in 7 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 5 hedge funds in our database with VLRS holdings at the end of the previous quarter.

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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Julian Robertson, Tiger Management

We’re going to check out the recent hedge fund action regarding Controladora Vuela Co Avcn SA CV (NYSE:VLRS).

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

Heading into the first quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the second quarter of 2018. By comparison, 4 hedge funds held shares or bullish call options in VLRS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

VLRS_may2019

More specifically, Teewinot Capital Advisers was the largest shareholder of Controladora Vuela Co Avcn SA CV (NYSE:VLRS), with a stake worth $25.2 million reported as of the end of December. Trailing Teewinot Capital Advisers was Tiger Management, which amassed a stake valued at $13.9 million. PAR Capital Management, Renaissance Technologies, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, established the most outsized position in Controladora Vuela Co Avcn SA CV (NYSE:VLRS). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.1 million position during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Controladora Vuela Co Avcn SA CV (NYSE:VLRS) but similarly valued. These stocks are Century Communities, Inc (NYSE:CCS), Turning Point Brands, Inc. (NYSE:TPB), CooTek (Cayman) Inc. (CTK), and First Mid-Illinois Bancshares, Inc. (NASDAQ:FMBH). This group of stocks’ market values resemble VLRS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCS 15 137521 -7
TPB 10 41037 0
CTK 1 311 -5
FMBH 4 7809 2
Average 7.5 46670 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $49 million in VLRS’s case. Century Communities, Inc (NYSE:CCS) is the most popular stock in this table. On the other hand CooTek (Cayman) Inc. (CTK) is the least popular one with only 1 bullish hedge fund positions. Controladora Vuela Co Avcn SA CV (NYSE:VLRS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on VLRS as the stock returned 65.8% and outperformed the market by an even larger margin.

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

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