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Avon Products, Inc. (AVP): Hedge Funds Are Cashing Out

Abigail Fisher

It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 24.4% during the first 9 months of 2019 and outperformed the S&P 500 ETF by 4 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Avon Products, Inc. (NYSE:AVP) changed during the first quarter.

Avon Products, Inc. (NYSE:AVP) was in 18 hedge funds' portfolios at the end of the second quarter of 2019. AVP has seen a decrease in hedge fund sentiment in recent months. There were 22 hedge funds in our database with AVP holdings at the end of the previous quarter. Our calculations also showed that AVP isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the eyes of most shareholders, hedge funds are assumed to be slow, old investment tools of years past. While there are over 8000 funds in operation today, Our experts choose to focus on the masters of this club, around 750 funds. These money managers manage bulk of the smart money's total capital, and by observing their matchless equity investments, Insider Monkey has spotted numerous investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

AVP_oct2019

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. We're going to take a glance at the recent hedge fund action encompassing Avon Products, Inc. (NYSE:AVP).

Hedge fund activity in Avon Products, Inc. (NYSE:AVP)

At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in AVP over the last 16 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Crispin Odey

The largest stake in Avon Products, Inc. (NYSE:AVP) was held by Renaissance Technologies, which reported holding $96 million worth of stock at the end of March. It was followed by Miller Value Partners with a $77.8 million position. Other investors bullish on the company included TIG Advisors, Odey Asset Management Group, and Alpine Associates.

Since Avon Products, Inc. (NYSE:AVP) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few hedge funds that slashed their entire stakes by the end of the second quarter. It's worth mentioning that Donald Yacktman's Yacktman Asset Management sold off the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling an estimated $45.1 million in stock. Constantinos J. Christofilis's fund, Archon Capital Management, also dumped its stock, about $36.9 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the second quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Avon Products, Inc. (NYSE:AVP) but similarly valued. These stocks are Shutterfly, Inc. (NASDAQ:SFLY), Bandwidth Inc. (NASDAQ:BAND), Chesapeake Lodging Trust (NYSE:CHSP), and Hope Bancorp, Inc. (NASDAQ:HOPE). This group of stocks' market caps are similar to AVP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SFLY,24,307901,-4 BAND,18,184105,-5 CHSP,11,34294,-1 HOPE,15,65791,1 Average,17,148023,-2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $311 million in AVP's case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table. On the other hand Chesapeake Lodging Trust (NYSE:CHSP) is the least popular one with only 11 bullish hedge fund positions. Avon Products, Inc. (NYSE:AVP) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on AVP as the stock returned 13.4% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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