Is Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS) A Good Stock To Buy ?
After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS).
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) investors should be aware of an increase in hedge fund interest lately. VLRS was in 8 hedge funds' portfolios at the end of the third quarter of 2019. There were 7 hedge funds in our database with VLRS holdings at the end of the previous quarter. Our calculations also showed that VLRS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous metrics stock traders employ to analyze their holdings. A duo of the most under-the-radar metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the broader indices by a solid margin (see the details here).
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Julian Robertson of Tiger Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to view the new hedge fund action encompassing Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS).
What have hedge funds been doing with Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS)?
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in VLRS a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) was held by Teewinot Capital Advisers, which reported holding $46.1 million worth of stock at the end of September. It was followed by Tiger Management with a $17.7 million position. Other investors bullish on the company included Renaissance Technologies, PAR Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Teewinot Capital Advisers allocated the biggest weight to Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS), around 15.69% of its 13F portfolio. Tiger Management is also relatively very bullish on the stock, earmarking 6.69 percent of its 13F equity portfolio to VLRS.
As one would reasonably expect, key hedge funds have jumped into Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) headfirst. Weld Capital Management, managed by Minhua Zhang, assembled the most outsized position in Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS). Weld Capital Management had $0.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace also made a $0 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks similar to Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS). We will take a look at Esperion Therapeutics, Inc. (NASDAQ:ESPR), Heritage Financial Corporation (NASDAQ:HFWA), Boot Barn Holdings Inc (NYSE:BOOT), and Alector, Inc. (NASDAQ:ALEC). This group of stocks' market valuations match VLRS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESPR,15,148350,-1 HFWA,9,42375,0 BOOT,22,173218,0 ALEC,13,259407,0 Average,14.75,155838,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $112 million in VLRS's case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand Heritage Financial Corporation (NASDAQ:HFWA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) is even less popular than HFWA. Hedge funds dodged a bullet by taking a bearish stance towards VLRS. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VLRS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); VLRS investors were disappointed as the stock returned 4.4% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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