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Hedge Funds Are Betting On Allison Transmission Holdings Inc (ALSN)

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider Allison Transmission Holdings Inc (NYSE:ALSN) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Is Allison Transmission Holdings Inc (NYSE:ALSN) an excellent stock to buy now? Money managers were in a bullish mood. The number of long hedge fund bets went up by 5 lately. Allison Transmission Holdings Inc (NYSE:ALSN) was in 28 hedge funds' portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that ALSN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 23 hedge funds in our database with ALSN positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we're going to analyze the key hedge fund action surrounding Allison Transmission Holdings Inc (NYSE:ALSN).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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

Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ALSN over the last 25 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Allison Transmission Holdings Inc (NYSE:ALSN) was held by Renaissance Technologies, which reported holding $152.8 million worth of stock at the end of September. It was followed by D E Shaw with a $42.8 million position. Other investors bullish on the company included Millennium Management, GLG Partners, and Sirios Capital Management. In terms of the portfolio weights assigned to each position Sirios Capital Management allocated the biggest weight to Allison Transmission Holdings Inc (NYSE:ALSN), around 2.08% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, dishing out 0.67 percent of its 13F equity portfolio to ALSN.

Consequently, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in Allison Transmission Holdings Inc (NYSE:ALSN). Balyasny Asset Management had $4.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $1.5 million position during the quarter. The following funds were also among the new ALSN investors: Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Peter Algert's Algert Global, and Karim Abbadi and Edward McBride's Centiva Capital.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Allison Transmission Holdings Inc (NYSE:ALSN) but similarly valued. These stocks are Freedom Holding Corp. (NASDAQ:FRHC), Livent Corporation (NYSE:LTHM), Ormat Technologies, Inc. (NYSE:ORA), Sunoco LP (NYSE:SUN), Ryan Specialty Group Holdings Inc. (NYSE:RYAN), KnowBe4 Inc. (NASDAQ:KNBE), and Genius Sports Ltd (NYSE:GENI). This group of stocks' market values are similar to ALSN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRHC,12,36936,-1 LTHM,27,277437,0 ORA,13,233291,-8 SUN,2,2788,-1 RYAN,18,379783,18 KNBE,18,469506,9 GENI,31,400592,-8 Average,17.3,257190,1.3 [/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 $257 million. That figure was $350 million in ALSN's case. Genius Sports Ltd (NYSE:GENI) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 2 bullish hedge fund positions. Allison Transmission Holdings Inc (NYSE:ALSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALSN is 75.8. 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. 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 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately ALSN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ALSN were disappointed as the stock returned -1.1% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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