We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of June 28th. In this article, we look at what those funds think of Avis Budget Group Inc. (NASDAQ:CAR) based on that data.
Is Avis Budget Group Inc. (NASDAQ:CAR) a healthy stock for your portfolio? Prominent investors are selling. The number of long hedge fund bets dropped by 7 lately. Our calculations also showed that CAR isn't among the 30 most popular stocks among hedge funds (view the video below). CAR was in 21 hedge funds' portfolios at the end of June. There were 28 hedge funds in our database with CAR holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the key hedge fund action surrounding Avis Budget Group Inc. (NASDAQ:CAR).
What have hedge funds been doing with Avis Budget Group Inc. (NASDAQ:CAR)?
At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in CAR a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, SRS Investment Management was the largest shareholder of Avis Budget Group Inc. (NASDAQ:CAR), with a stake worth $569.2 million reported as of the end of March. Trailing SRS Investment Management was Renaissance Technologies, which amassed a stake valued at $120.8 million. Glenview Capital, Pzena Investment Management, and Tremblant Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Because Avis Budget Group Inc. (NASDAQ:CAR) has faced declining sentiment from the smart money, it's easy to see that there were a few hedgies that slashed their entire stakes heading into Q3. Interestingly, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling about $12 million in stock, and Robert Pohly's Samlyn Capital was right behind this move, as the fund said goodbye to about $7.8 million worth. These moves are interesting, as total hedge fund interest dropped by 7 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Avis Budget Group Inc. (NASDAQ:CAR) but similarly valued. These stocks are Main Street Capital Corporation (NYSE:MAIN), ManTech International Corporation (NASDAQ:MANT), Green Dot Corporation (NYSE:GDOT), and Trinity Industries, Inc. (NYSE:TRN). This group of stocks' market valuations are similar to CAR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAIN,4,7969,0 MANT,11,11360,-1 GDOT,18,242981,-9 TRN,23,664414,-5 Average,14,231681,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $1046 million in CAR's case. Trinity Industries, Inc. (NYSE:TRN) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 4 bullish hedge fund positions. Avis Budget Group Inc. (NASDAQ:CAR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CAR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CAR were disappointed as the stock returned -19.6% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.