What Hedge Funds Think Of The S&P 500’s Newest Member

How have hedgies been trading Advance Auto Parts, Inc. (NYSE:AAP)?

According to Insider Monkey’s database, Fir Tree, founded by Jeffrey Tannenbaum had the largest position in Advance Auto Parts, Inc. (NYSE:AAP), with around 1.8 million shares worth close to $274.7 million at the end of March, accounting for 3.9% of its total 13F portfolio. Coming in second is Bain Capital, managing Brookside Capital, with around 1.2 million shares valued at $175.9 million at the end of first trimester; the fund has 4.4% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Israel Englander’s Millennium Management, Steve Cohen‘s Point72 Asset Management, and John Burbank’s Passport Capital.

Even though the number of hedge funds holding long positions in the stock was reduced in the first quarter, the aggregate capital invested by the hedge funds has increased significantly during the quarter. This shows that there were some hedge fund managers who opted to move out of this stock, but there were other hedge fund managers who strengthened their position in the stock considerably. Notably, Fir Tree, which as mentioned held the largest position in the stock at the end of March, had just 278,000 shares in the company at the end of 2014. Israel Englander’s Millennium Management had around 800,000 shares at the end of the first quarter, up from around 200,000 shares at the end of last year. Among the hedge funds who opted to say good bye to the stock, Christopher Medlock James‘ Partner Fund Management lead the way by selling around 420,000 shares during the first three months.

Hedge funds were bullish on Advance Auto Parts, Inc. (NYSE:AAP) during the first quarter and the inclusion of the stock into the S&P 500 index is an additional boost for it. Hedge funds were right in investing more in the stock during the first quarter, but the hedge fund activity on the stock during the second quarter might give us more insight into the stock. Considering bullish hedge fund sentiment, we recommend buying this stock.

Disclosure: None