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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Afya Limited (NASDAQ:AFYA).
Is Afya Limited (AFYA) a good stock to buy? AFYA shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of September. Our calculations also showed that AFYA 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). At the end of this article we will also compare AFYA to other stocks including Progyny, Inc. (NASDAQ:PGNY), Chart Industries, Inc. (NASDAQ:GTLS), and Seres Therapeutics Inc (NASDAQ:MCRB) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Howard Marks of Oaktree Capital Management
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. Now we're going to take a peek at the latest hedge fund action surrounding Afya Limited (NASDAQ:AFYA).
What have hedge funds been doing with Afya Limited (NASDAQ:AFYA)?
At Q3's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AFYA over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Afya Limited (NASDAQ:AFYA) was held by Oaktree Capital Management, which reported holding $47.7 million worth of stock at the end of September. It was followed by Polar Capital with a $1.7 million position. Other investors bullish on the company included Arrowstreet Capital, Marshall Wace LLP, and PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Oaktree Capital Management allocated the biggest weight to Afya Limited (NASDAQ:AFYA), around 1.04% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to AFYA.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was ExodusPoint Capital).
Let's go over hedge fund activity in other stocks similar to Afya Limited (NASDAQ:AFYA). We will take a look at Progyny, Inc. (NASDAQ:PGNY), Chart Industries, Inc. (NASDAQ:GTLS), Seres Therapeutics Inc (NASDAQ:MCRB), StepStone Group Inc. (NASDAQ:STEP), Ping Identity Holding Corp. (NYSE:PING), Vaxcyte, Inc. (NASDAQ:PCVX), and Vonage Holdings Corp. (NASDAQ:VG). All of these stocks' market caps are closest to AFYA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PGNY,20,116628,1 GTLS,20,223347,-2 MCRB,12,190096,7 STEP,15,83624,15 PING,11,73051,-4 PCVX,10,473971,-2 VG,36,368753,6 Average,17.7,218496,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $52 million in AFYA's case. Vonage Holdings Corp. (NASDAQ:VG) is the most popular stock in this table. On the other hand Vaxcyte, Inc. (NASDAQ:PCVX) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Afya Limited (NASDAQ:AFYA) is even less popular than PCVX. Our overall hedge fund sentiment score for AFYA is 25. 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. Hedge funds dodged a bullet by taking a bearish stance towards AFYA. Our calculations showed that the top 20 most popular hedge fund stocks 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 November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately AFYA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AFYA investors were disappointed as the stock returned 2% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.