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American Virtual Cloud Technologies, Inc. (AVCT) Fell Out Of Favor With Hedge Funds

·6 min read

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT).

American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 14. AVCT has experienced a decrease in hedge fund interest recently. There were 5 hedge funds in our database with AVCT positions at the end of the fourth quarter. Our calculations also showed that AVCT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Bart Baum of Ionic Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to review the fresh hedge fund action regarding American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT).

Do Hedge Funds Think AVCT Is A Good Stock To Buy Now?

At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AVCT over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is AVCT A Good Stock To Buy?
Is AVCT A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Bart Baum's Ionic Capital Management has the number one position in American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT), worth close to $0.8 million, accounting for 0.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Ken Griffin's Citadel Investment Group, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Ionic Capital Management allocated the biggest weight to American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT), around 0.1% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0005 percent of its 13F equity portfolio to AVCT.

Seeing as American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) has faced a decline in interest from hedge fund managers, it's easy to see that there was a specific group of funds that elected to cut their full holdings heading into Q2. It's worth mentioning that Michael Platt and William Reeves's BlueCrest Capital Mgmt. dropped the largest position of the 750 funds watched by Insider Monkey, worth an estimated $1.4 million in stock. Ari Zweiman's fund, 683 Capital Partners, also dumped its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds heading into Q2.

Let's check out hedge fund activity in other stocks similar to American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT). These stocks are Avino Silver & Gold Mines Ltd. (NYSE:ASM), ReWalk Robotics Ltd. (NASDAQ:RWLK), Phunware, Inc. (NASDAQ:PHUN), Marchex, Inc. (NASDAQ:MCHX), Wayside Technology Group, Inc. (NASDAQ:WSTG), Manning and Napier Inc (NYSE:MN), and Reading International, Inc. (NASDAQ:RDI). This group of stocks' market values match AVCT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASM,1,281,0 RWLK,4,8031,0 PHUN,1,42,0 MCHX,6,10432,-1 WSTG,3,10993,1 MN,8,14849,-1 RDI,7,21246,0 Average,4.3,9411,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $1 million in AVCT's case. Manning and Napier Inc (NYSE:MN) is the most popular stock in this table. On the other hand Avino Silver & Gold Mines Ltd. (NYSE:ASM) is the least popular one with only 1 bullish hedge fund positions. American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AVCT is 23.7. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on AVCT as the stock returned 8.9% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

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

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