What Does Smart Money Think about Avery Dennison Corp (AVY)?

Does Avery Dennison Corp (NYSE:AVY) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Avery Dennison Corp (NYSE:AVY) was included in the equity portfolios of 30 hedge funds tracked by Insider Monkey at the end September. During the third quarter, the company saw an increase in activity from the world’s largest hedge funds, as the number of funds long the stock increased by four. However, 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 Shire PLC (ADR) (NASDAQ:SHPG), Signature Bank (NASDAQ:SBNY), and Allegion PLC (NYSE:ALLE) to gather more data points.

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Now, let’s view the latest action encompassing Avery Dennison Corp (NYSE:AVY).

What does the smart money think about Avery Dennison Corp (NYSE:AVY)?

Heading into the fourth quarter of 2016, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on Avery Dennison Corp (NYSE:AVY), a change of 15% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the most valuable position in Avery Dennison Corp (NYSE:AVY), worth close to $167.9 million, amounting to 0.3% of its total 13F portfolio. Coming in second is Phill Gross and Robert Atchinson’s Adage Capital Management, which holds a $63.1 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass Jim Simons’ Renaissance Technologies, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Israel Englander’s Millennium Management.

As aggregate interest increased, key hedge funds have been driving this bullishness. Winton Capital Management, managed by David Harding, assembled the biggest position in Avery Dennison Corp (NYSE:AVY). Winton Capital Management had $9.6 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also made a $5.2 million investment in the stock during the quarter. The other funds with brand new AVY positions are Joel Greenblatt’s Gotham Asset Management, Steve Cohen’s Point72 Asset Management, and George Hall’s Clinton Group.

Let’s now review hedge fund activity in other stocks similar to Avery Dennison Corp (NYSE:AVY). We will take a look at Shire PLC (ADR) (NASDAQ:SHPG), Signature Bank (NASDAQ:SBNY), Allegion PLC (NYSE:ALLE), and Mallinckrodt PLC (NYSE:MNK). This group of stocks’ market valuations match AVY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SHPG 50 3579399 -14
SBNY 29 455760 2
ALLE 36 876033 2
MNK 32 1444239 3

As you can see these stocks had an average of 37 funds with long positions and the average amount invested in these stocks was $1.59 billion. That figure was $404 million in AVY’s case. Shire PLC (ADR) (NASDAQ:SHPG) is the most popular stock in this table. On the other hand Signature Bank (NASDAQ:SBNY) is the least popular one with only 29 bullish hedge fund positions. Avery Dennison Corp (NYSE:AVY) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Shire PLC (ADR) (NASDAQ:SHPG) might be a better candidate to consider a long position.