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Is Avaya Holdings Corp. (NYSE:AVYA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is AVYA stock a buy or sell? Avaya Holdings Corp. (NYSE:AVYA) has experienced an increase in support from the world's most elite money managers lately. Avaya Holdings Corp. (NYSE:AVYA) was in 35 hedge funds' portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that AVYA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Richard Driehaus of Driehaus Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 go over the latest hedge fund action regarding Avaya Holdings Corp. (NYSE:AVYA).
Do Hedge Funds Think AVYA Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in AVYA a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Melqart Asset Management was the largest shareholder of Avaya Holdings Corp. (NYSE:AVYA), with a stake worth $59.3 million reported as of the end of December. Trailing Melqart Asset Management was Millennium Management, which amassed a stake valued at $34.8 million. Arrowstreet Capital, Driehaus Capital, and Alta Fundamental Advisers were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Alta Fundamental Advisers allocated the biggest weight to Avaya Holdings Corp. (NYSE:AVYA), around 17.65% of its 13F portfolio. AIGH Investment Partners is also relatively very bullish on the stock, dishing out 5.13 percent of its 13F equity portfolio to AVYA.
As aggregate interest increased, key money managers have been driving this bullishness. AIGH Investment Partners, managed by Orin Hirschman, assembled the biggest position in Avaya Holdings Corp. (NYSE:AVYA). AIGH Investment Partners had $12.6 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider's SG Capital Management also initiated a $7.6 million position during the quarter. The other funds with new positions in the stock are Scott Kapnick's HPS Investment Partners, Valerie Malter's Matarin Capital, and Thomas Bailard's Bailard Inc.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Avaya Holdings Corp. (NYSE:AVYA) but similarly valued. We will take a look at Patrick Industries, Inc. (NASDAQ:PATK), The Macerich Company (NYSE:MAC), American Woodmark Corporation (NASDAQ:AMWD), Big Lots, Inc. (NYSE:BIG), Tupperware Brands Corporation (NYSE:TUP), Waddell & Reed Financial, Inc. (NYSE:WDR), and Plains GP Holdings LP (NASDAQ:PAGP). This group of stocks' market valuations match AVYA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PATK,18,103419,1 MAC,16,42235,-2 AMWD,11,45213,-4 BIG,19,152459,-4 TUP,14,125818,-4 WDR,25,145937,4 PAGP,18,76545,0 Average,17.3,98804,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $373 million in AVYA's case. Waddell & Reed Financial, Inc. (NYSE:WDR) is the most popular stock in this table. On the other hand American Woodmark Corporation (NASDAQ:AMWD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Avaya Holdings Corp. (NYSE:AVYA) is more popular among hedge funds. Our overall hedge fund sentiment score for AVYA is 81. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7.9% in 2021 through April 1st but still managed to beat the market by 0.4 percentage points. Hedge funds were also right about betting on AVYA as the stock returned 52.4% since the end of December (through 4/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.